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Alternative Investment Management Association Representing the global hedge fund industry

EU Bank Recovery and Resolution Directive

On 6 June 2012, the European Commission released its proposal for a ‘Directive establishing a framework for the recovery and resolution of credit institutions and investment firms’ (BRRD).

The BRRD was proposed in order to help meet the EU’s G20 and FSB commitments on the recovery and resolution of systemically important financial institutions and provides for a harmonised system of rules across the EU intended to deal with the distress and failure of credit institutions and large investment firms within the EU in order to minimise consequences for the broader financial system and remove the moral hazard of taxpayer funded bail-outs.

The BRRD proposal can be separated into three categories:

  • Prevention - which includes requirements for recovery and resolution plans, the removal of obstacles to resolvability and intra-group support arrangements;
  • Early Intervention - which includes the power for relevant authorities to intervene in the activities of a struggling institution; and
  • Resolution - which includes rules for the relevant authorities to take certain actions using one or more ‘resolution tools’ to resolve institutions which have failed or are likely to fail in order to minimise systemic impacts and recourse to taxpayer funds.

The European Parliament ECON Committee and Council of the European Union adopted their respective final positions on the Level 1 BRRD text in May and June 2013. Inter-institutional Trialogues then commenced, with a political agreement being reached on 11 December 2013.

The politically agreed level 1 text was formally adopted by the European Parliament on 15 April 2014 and by the Council on 6 May 2014.

 

The BRRD was published in the Official Journal of the European Union on 12 June 2014. It will enter into effect on 1 January 2015.


Key legislative documents

Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms (June 2014)

 


Relevant consultations

Draft Regulatory Technical Standards on the content of recovery plans under the draft Directive establishing a framework for the recovery and resolution of credit institutions and investment firms (March 2013)

DG Internal Market Discussion Paper on the debt write-down tool – bail-in (April 2012)

EC Consultation on technical details of a possible European crisis management framework (January 2011)


AIMA documents

Summary of Final Policial Agreement for BRRD (February 2014) 

Summary of the bail-in provisions of the BRRD in relation to derivatives for Trialogues (August 2013)

Response to Discussion Paper on the debt write-down tool – bail-in (May 2012)

Response to EC crisis management consultation (March 2011)


Other documents

EU Press Release on Political Agreement for BRRD (December 2013)

ECB Opinion on Commission Proposal for the RRD (November 2012)

EC Communication on an EU Framework for Crisis Management in the Financial Sector (October 2010)

EC Communication on Bank Resolution Funds (May 2010)

EC Communication – An EU Framework for Cross-Border Crisis Management in the Banking Sector (October 2009)

 

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  1. AIMA's Policy Principles
  2. Asset Management Regulation
    1. EU Asset Management Regulation
      1. AIFMD
      2. European Capital Markets Regulation
      3. MiFID / MiFIR
      4. UCITS
        1. ETFs and Structured UCITS
      5. Venture Capital
      6. Shareholder Rights Directive
    2. US Hedge Fund Adviser Regulations
      1. Registration and Reporting
      2. Incentive-Based Compensation
      3. JOBS Act
    3. Asia Pacific Asset Management regulation
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    5. Regulation of NBFCs / SIFIS
    6. Supervision
      1. UK regulatory reform
      2. European Supervisory Authorities
      3. US Self-Regulatory Organisations
    7. Remuneration
      1. UK
      2. US
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      3. MAD / MAR
      4. Flash Crash
      5. IOSCO
      6. Germany
      7. CFTC Automated Trading
    4. Insurance Regulation
      1. Solvency II
    5. Market Abuse
      1. MAD / MAR
      2. Indices as Benchmarks
    6. Position Limits
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      2. CFTC Position Limits
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      1. BEPS
      2. Dealing Commission
      3. Derivatives
      4. FATCA
      5. FTT
      6. High Frequency Trading
      7. MiFID / MiFIR
      8. Other Hot Asset Management Topics
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      11. Trading
      12. UK Partnership Tax Review
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