On 6 June, the European Commission published its proposal for a Bank Recovery and Resolution Directive . The Directive aims to provide Member States with a set of harmonised powers and tools to deal with bank crises as quickly and efficiently as possible. It will apply to all credit institutions and investment firms within the EU. The tools, which are set out within the resolution framework proposed by the Directive, can be separated into three categories: prevention, early intervention and resolution.
The Directive will require banks to put a recovery plan in place and the supervisory authorities within each Member State will be required to prepare resolution plans. The early intervention powers will be triggered in the event that a credit institution or investment firm fails to meet, or looks likely to fall short of, its regulatory capital requirements. Resolution will be a last resort for those institutions who have not responded to the preventative and early intervention measures already applied.
At this stage, the European Commission anticipates that Member States will finalise implementing measures for the proposed Directive by 31 December 2014, to apply from 1 January 2015.