On 30 October 2024, the Single Resolution Board (SRB) published a speech by its chair, Dominique Laboureix, in which he addressed how to eliminate lingering doubts around the EU bank resolution framework and the need to tackle inevitable unknowns that arise in a bank crisis.

Lingering doubts despite a strong framework and important progress

Mr Laboureix notes that whilst the EU was largely spared by the recent turmoil there have been concerns raised in the press about bank mergers and acquisitions, arguing that in a crisis, taxpayers from one Member State could end up bailing out depositors from another. As a resolution practitioner, Mr Laboureix argues that given the progress made since 2008 with, for example, banks accumulating loss-absorption capacity and establishing well-staffed resolution planning units, the debate on who bails out whom is from a different era.

However, Mr Laboureix acknowledges that the EU resolution framework is not perfect, nor that resolvability is a static condition. Becoming and remaining resolvable is an iterative process requiring continuous adaptation to rapidly changing market conditions and emerging risks.

What should we do to ensure that resolution is no more in doubt?

The key point for Mr Laboureix is that the more complete and up-to-date the resolution framework, the more credibility it will have in the moment of need. Therefore, there should be a “double down” on efforts initiated with the Financial Stability Board’s lessons learned exercise. There are also a few lessons learned that should be considered as a priority, these cover bail-in and securities law, cooperation and communication outside the crisis management group, optionality for resolution strategies and liquidity in resolution.