ECB has responded to the Commission’s request for an opinion on the Bank Recovery and Resolution Directive (RRD). It makes the following observations of interest:
- maintaining instead of resolving a failing institution should only be considered when justified by financial stability concerns;
- resorting to state aid should not be in itself an objective criterion to trigger resolution, but rather another element in the assessment of the institution’s prudential situation;
- central banks should not provide finance to bridge institutions or bad banks, even when these are brought under a central bank's ownership and resolution authority;
- legal certainty and enforceability of intra-group financial support arragenments must be ensured;
- the use of the bail-in tool to maintain a failing institution should only be considered in exceptional cases; and
- EBA should assess introducing a requirement that bail-in instruments cannot be held by the banking sector.
(Source: ECB Opinion on RRD)