On 20 October 2009, the European Commission published for comment a Communication which was entitled An EU framework for cross-border crisis management in the banking sector. In this Communication the Commission considered measures that were intended to deliver two objectives:
- To ensure that all national supervisors have adequate tools to identify problems in banks at a sufficiently early stage and to intervene to restore the health of the institution or group, or prevent further decline.
- To make it possible for cross-border banks to fail without serious disruption to vital banking services or contagion to the financial system as a whole.
The deadline for comments on the Communication was 20 January 2010.
- The Commission has now published an overview of the responses to the Communication. Key points include:
- The Commission received 64 responses from a variety of stakeholders including 20 responses from national public authorities.
- Whilst most respondents argued that a crisis management framework should ultimately cover all financial institutions, there was general agreement with the Commission's suggestion that it made sense to start in the first phase by focussing on deposit taking institutions.
- There was broad consensus that triggers governing the use of early intervention tools should not be automatic and should incorporate a sufficient degree of flexibility and discretion.
- The response to recovery and resolution plans was mixed. With two exceptions, Member States were broadly favourable to the idea of such plans on the grounds that they might help to incite resolution-friendly structures, prepare for burden sharing, and establish clear and transparent thresholds.
- Few responded to the questions on branch supervision and suggestions included a preliminary review of the current framework, empowering the host Member State authority to request action from the home Member State authority and adopting powers parallel to those under Article 62 of MiFID.
- Respondents expressed considerable interest to look into the feasibility of an asset transferability framework, although others expressed scepticism about the challenges and complexities.
- There was strong support for the resolution tools suggested in the Communication (private sector acquisition, transfer of business to a temporary bridge bank, partial transfer of assets and separation of clean and toxic assets between good and bad banks).