As a part of a broader reform of the financial markets, the EU is proposing a common framework of rules and powers to help EU countries intervene to manage banks in difficulty. The proposal adopted by the EC on Wednesday plans to shift the burden of restructuring costs and responsibility to the bank's shareholders, creditors and any employees responsible for mismanagement.
The Framework proposes instruments divided into three main fields – prevention, early intervention and resolution. The banks would be obliged to draw up recovery plans. If the bank's liquidity falls under a certain level, an intervention will be made immediately. Finally, the national authorities would dispose of a set of tools to assume control over a failing bank including selling the bank or converting debt. The proposal should come into effect at the beginning of 2015.
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20th December 2021
13th January 2022