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ARTICLE · 05 MAY 2023

Bank Resolution: Commission CMDI Proposal Published

Arthur Cox
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The European Commission's long-signposted proposal to update the existing bank CMDI (crisis management and deposit insurance) framework was announced last week.

IrelandFinance and Banking
Arthur Cox
Arthur Cox
Robert Cain
Robert Cain
Phil Cody
Phil Cody
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The European Commission's long-signposted proposal to update the existing bank CMDI (crisis management and deposit insurance) framework was announced last week.

It consists of proposals to amend the Bank Recovery and Resolution Directive, amend the Single Resolution Mechanism Regulation and amend the Deposit Guarantee Schemes (DGS) Directive.

An overarching aim of the proposal is depositor protection. The Commission wants to better protect depositors by prioritising the transfer of their funds to a 'healthy' bank should their account bank fail.

Under the proposal, banks' capital buffers will remain their first line of defence, followed by 'industry-funded safety nets' i.e. DGS and resolution funds. To access safety nets such as resolution funds, the 8% minimum bail in will remain. However, banks with high deposit volumes may (subject to strict conditions) be able to access DGS funds as a bridge to meet the 8% level to insulate depositors from losses. All

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This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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