Publications and articles
Publication of the high-level description of the Resolution Council‘s approach to the execution of the write-down and conversion of capital instruments and bail-inable liabilities pursuant to art. 4.1 of the Guideline EBA/GL/2023/01
The Bail-in Mechanism: Principles and Execution of the Bail-in Tool (English language summary).
Presentations
13 Apríl 2015: Presentation on Crisis management framework at the seminar on “Integration in Europe: EU and EEU” in Vienna (presentation).
Articles in journals
GAJDOŠ, Tomáš: Deposit Protection Fund usage within the context of revision of the crisis management and deposit insurance framework (CMDI). Justice Revue, 2021, No. 11, p. 1303.
Abstract: Author briefly clarifies the context of the considered revision of the crisis management and deposit insurance framework, the concept of resolvability of the bank, and presents some of the funding limits applied in resolution and normal insolvency proceedings under existing legislation. In the context of funding limits, the author seeks to elaborate on possibilities to improve participation of the national deposit guarantee scheme as one of the funding sources available under the current regime and considers their implications.
GAJDOŠ, Tomáš: Short treatise on banking insolvency and the way forward. Justice Revue, 2019, No. 10, p. 984.
Abstract: Author is striving to provide, in a reference to the nature of the European regulation related to insolvency, a holistic insight on the issues relevant to the law governing the initiation of banking insolvency and its national specifics. Special attention is given to the effects which have been brought into the area of banking insolvency after introducing the Single Resolution Mechanism, but also to some deficiencies arising from the national and European legislation and it‘s way forward.
ĎURIAČ, Daniel: Failure of Latvia’s AS PNB Banka. Biatec, Vol. 27, 2019, No. 06/December, p. 24-28.
Abstract: At the request of Latvia’s Financial and Capital Market Commission in its capacity as the competent supervisory authority, the European Central Bank (ECB) decided in March 2019 to classify Latvia’s AS PNB banka as significant and to assume its direct supervision as of 4 April 2019. On 12 August 2019 the ECB concluded an on-site inspection, which found indications that the assets of the bank were less than its liabilities. As a result, on 15 August, the ECB issued its assessment that PNB was failing or likely to fail. Subsequently on the same day, the Single Resolution Board determined that resolution action was not necessary in the public interest. Less than one month later, on 12 September 2019, a Latvian court declared PNB insolvent. The PNB case shows how European authorities have managed to deal with a failing bank within half a year after taking charge of the matter. At the same time, however, the PNB case has revealed something of the current issues surrounding the resolution framework. In addition to that, PNB case brought to light some open questions regarding current resolution framework. The article therefore seeks not only to provide a closer look at this particular case, but also to address these open questions in a more comprehensive manner and to set the PNB case in the broader context of changes taking place in Latvia and in the EU as a whole.
ĎURIAČ, Daniel: The ABLV Bank crisis. Biatec, Vol. 26, 2018, No. 05/October, p. 10-14.
Abstract: On 13 February 2018 the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced plans for measures that would prohibit the opening or maintaining of a correspondent account in the United States for, or on behalf of, ABLV Bank, the third-largest bank in Latvia at the time. The reason given for this unusual step was the bank’s non-compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) rules. Immediately following the FinCEN announcement, the bank experienced an abrupt wave of withdrawal of deposits, even though FinCEN’s proposed measures were not as yet in effect. Within ten days after the announcement, the European Central Bank (ECB) determined that ABLV Bank, which until then had reported a relatively strong capital position and ample liquidity, was failing or likely to fail. Subsequently, the Single Resolution Board (SRB) determined that resolution action was not necessary and that, as a consequence, the winding up of ABLV Bank and its Luxembourg subsidiary would take place under the law of Latvia and Luxembourg, respectively. But while the Latvian bank somewhat unconventionally opted for voluntary liquidation, requests for the liquidation of the Luxembourg subsidiary were rejected by a court in that country. The ABLV case has revealed several deficiencies in the current resolution framework, as well as in the monitoring of compliance with AML/CFT rules within the European Union. This article describes the situation in the Latvian banking sector before the ABLV crisis, the current state of the case, and what these developments will mean for Latvia and the EU.
GAJDOŠ, Tomáš: Selected legal aspects of the implementation of Single Resolution Board decisions. Biatec, Vol. 26, 2018, No. 04/August, p. 17-21.
Abstract: One of the core features of the Single Resolution Mechanism (SRM) is the fact that tasks arising under the SRM are divided between the EU’s Single Resolution Board (SRB) and national resolution authorities (NRAs). Provisions aimed at ensuring consistency in their mutual cooperation are laid down in Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms (the BRRD), in Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund (the SRMR), in a number of technical regulations, and in the COFRA agreement. Nevertheless, the implementation of SRB decisions is left largely to the discretion of NRAs, and this situation has given rise to a lack of consistency in approaches and to several legal uncertainties. This article attempts to clarify the legal basis for the implementation of certain types of SRB decisions and to provide an in-depth analysis of the most widely discussed legal aspects (i.e. the right to be heard, the language regime, judicial remedies) relating to the implementation of decisions on the following matters: the setting of the minimum requirement for own funds and eligible liabilities (MREL), subject to write-down and conversion powers, in accordance with Article 12(1) of the SRMR; ex ante contributions to the single resolution fund; and the adoption of resolution schemes.TÖZSÉR, Tomáš: Resolution in the insurance sector. Biatec, Vol. 25, 2017, No. 06/ December, p. 15-16.
Abstract: During the summer of 2017, EIOPA and the ESRB separately published their views on the benefits and design of the harmonised European recovery and resolution framework for (re)insurers. The documents may be the first concrete step towards a European Union framework that directly affects insurance business in Slovakia. The aim of this article is to provide broad details about the main conclusions of the documents, highlight some of the comments made by NBS in the document drafting process, and to look at the latest global-level activities in this area.
GAJDOŠ, Tomáš – PÉNZEŠ, Peter: The resolution of Banco Popular Español S.A. Biatec, Vol. 25, 2017, No. 4/August, p. 8-11.
Abstract: The financial crisis exposed the fact that general corporate insolvency procedures may not always be appropriate for financial institutions as they may not always ensure sufficient speed of intervention, the continuation of critical functions of institutions and the preservation of financial stability. The way out of this situation is provided by an EU – wide framework establishing the resolution of financial institutions by means of the application of resolution tools. This article deals with the current progress in bank resolution by focusing on the situation at Banco Popular Español S.A., a Spanish bank whose resolution was approved at the beginning of June.
PÉNZEŠ, Peter – ĎURIAČ, Daniel: Resolution in the Italian banking sector. Biatec, Vol. 25, 2017, No. 4/August, p. 2-8.
Abstract:The Italian banking sector has for a long time been burdened with an excess of non-performing loans. This has resulted in the failure of several domestic financial institutions in recent years. The situation in Italy is being closely watched, mainly because it provides an opportunity to apply the new EU wide resolution framework, which is intended to shift the costs of bank failures from the taxpayers to investors. This article looks at the resolution of financial institutions – including the reasons behind the use of resolution tools – in the context of the new framework as well as state aid rules. In addition, it presents current initiatives to prevent bank failures and to modify the state aid regime in EU.
PÉNZEŠ, Peter – ĎURIAČ, Daniel: The current state of the Banking Union’s third pillar. Biatec, Vol. 25, 2017, No. 1/January, p. 20-23.
Abstract: When the financial crisis turned into an economic crisis, one of the European Union’s responses was to initiate the Banking Union project. While its first two pillars – the Single Supervisory Mechanism and the Single Resolution Mechanism – are now in place, the Banking Union remains incomplete due to the absence of its third pillar, a European Deposit Insurance Scheme. To make progress on EDIS was one of the main priorities of the Slovak Presidency of the Council of the European Union, within its financial market regulation agenda. The aim of this contribution is not to analyse EDIS, which is probably quite familiar to Biatec readers, but rather to give an account of what was achieved on this issue during the Slovak EU Presidency and to summarise the current state of discussionsPÉNZEŠ, Peter – ĎURIAČ, Daniel: Changes to the legal framework for resolution. Biatec, Vol. 24, 2016, No. 6/December, p. 20-22.
Abstract: On 15 November 2016 amendment to the Resolution Act (No 371/2014 Coll.) has entered into force in Slovakia. The amendment’s most significant provision is to allow the signing of an agreement on a bridge financing mechanism between the Slovak Government and the Single Resolution Board. The amendment also adds further details to certain provisions of the Resolution Act and of other laws related to the implementation of the EU’s Bank Recovery and Resolution Directive. This article summarises the key aspects of the amendment and explains their purpose and significance within the resolution process.
MIŠKOVÁ, Martina – ORSZÁGHOVÁ, Lucia: Risk-based Approach to Resolution and Deposit Guarantee Funds: How is Riskiness Measuerd?. Boatec, Vol. 23, 2015, No. 07/July, p. 21-25.
Abstract: Following the financial crisis, the European lawmakers have introduced a multi-layer safety net for the financial sector. At its core stand two complementary threads – the resolution fund and the deposit guarantee fund, which areto be activated in case everything else fails. One of their prominent features is a risk-adjusted premia for individual contributions. Building on previous work (Orszaghova and Miskova, 2015a), this article provides rationale for ex-ante funding as well as insight into the methodology for the calculation of risk-weighted contributions. It argues that accurately calibrated risk adjusted premia for individual credit institutions would reduce their moral hazard and thus restore the stability of the financial sector in the longer- term perspective. (p. 21)
MIŠKOVÁ, Martina – ORSZÁGHOVÁ, Lucia: Irrevocable Payment Commitments: A New Form of Servicing Banks´ Obligations towards the EU Sovereigns?. Biatec, Vol. 23, 2015, No. 06/ June, p. 21-25.
Abstract: Building on a previous work (Országhová – Mišková, 2015), this article focuses on the specific topic of irrevocable payment commitments, introduced as an alternative to cash payments to both the resolution fund and the deposit guarantee fund. This novel instrument in the EU regulatory framework could help achieve the future target level of ex ante funding, while limiting the impact of the new measures on the lending capacity of credit institutions in the post-crisis period. Besides describing the main characteristics of irrevocable payment commitments, the article discusses the rationale behind their introduction and their incorporation into the framework of annual financial contributions. Furthermore, it compares the EU-wide framework to similar approaches applied in particular EU Member States. (p. 21)
TÖZSÉR, Tomáš: Resolution of financial institutions other than banks. Biatec, Vol. 23, 2015, No. 04/ April, p. 22-24.
Abstract: The introductory article on resolution of non-bank financial corporations aims at shedding some light on the current state of preparation of the resolution framework at both the global and the European levels. It also includes the progress made in the banks and investment companies resolution framework
MIŠKOVÁ, Martina – ORSZÁGHOVÁ, Lucia: MREL: Gone Concern Loss Absorbing Capacity. Biatec, Vol. 23, 2015, No. 03/ March, p. 18-26.
Abstract: A number of regulatory reforms have been initiated to address misjudgements revealed by the recent financial crisis. This article reviews the recently adopted European framework for resolution regimes, addressing the lack of a coherent approach in dealing with the insolvency of complex cross-border financial institutions. A particular attention is given to the resolvability of a financial institution together with the on-going discussion regarding the calibration of the MREL ratio, raising the questions from the perspective of Central, Eastern and South-Eastern European region. The underlying reform objective is to create a safer, more transparent and more responsible financial system, which is working for the economy and the society as a whole and which is able to finance the real economy, as an indispensable precondition for sustainable growth.
ORSZÁGHOVÁ, Lucia – MIŠKOVÁ, Martina: Financial Contributions and Bank Fees in the Banking Union. Biatec, Vol. 23, 2015, No. 01/ January, p. 13-18.
Abstract: The banking union has brought about substantial changes to the functioning of the EU financial sector, including new bank fees and contributions. This article reviews different charges introduced by the new framework, while paying particular attention to the new bank charges imposed at the EU level. The crisis has marked a turning point, and the focus is now on breaking the vicious cycle between private banks and public finances by transferring the costs of any future failure to the credit institutions themselves.
TÖZSÉR, Tomáš: Crisis Reslution Plans. Biatec, Vol. 23, 2015, No. 01/ January, p. 4-6.
Abstract: The article deals with the crisis resolution planning. A new concept is presented which has been introduced by the act on crises resolution in the financial market. By this act a new European framework dealing with the crises resolution of selected institutions is being transposed into the Slovak law. Crisis resolution planning is a process that should ensure readiness of a crisis resolution authority and selected institution to resolve a crisis situation as smoothly and quickly as possible in the moment it occurs. The article describes objectives, essential aspects, as well as information inputs and outputs.
SATINOVÁ, Petra – SLEZÁKOVÁ, Zuzana: National Reslution Authority and its Powers. Biatec, Vol. 22, 2014, No. 10/ December, p. 11-13.
Abstract: The article informs about the creation of a new resolution authority to deal with crisis situations, which will become operational once the new law on dealing with crisis situations comes into effect, i.e. from 1 January 2015. This article presents basic tasks, scope and powers of the Resolution Council. Special attention is paid to its authorisation to encroach upon the property rights of shareholders and creditors, which the Resolution Council may apply only in exceptional cases. This means the cases when it is not possible, within a reasonable time, to ensure the continuation of critical functions of selected institutions by other measures in order to prevent a failure of any of these institutions and its negative impact on the financial market. An analysis suggests that the power to enter upon the property rights of shareholders and creditors may be provided for in the Constitution of the Slovak Republic and analogous with powers regulated by other generally binding legislation.
DVOŘÁČEK, Vladimír – ČILLÍKOVÁ, Júlia – PÉNZEŠ, Peter: Current developments in the second pillar of the Banking Union. Biatec, Vol. 22, 2014, No. 03/ March, p. 20-24.
Abstract: The banking union has already been presented very comprehensively in previous issues of the journal, while the challenges of creating its first and second pillars (the Single Supervisory Mechanism and the Single Resolution Mechanism) have also been dealt with. Meanwhile, the EU Regulation on the first pillar was adopted in November 2013 and the third pillar (the common system for deposit protection) has been suspended. Currently, intense discussions on the second pillar are under way. The article intends to provide the latest information about this process and about measures that have to be taken in Slovakia to establish its national resolution authority and framework for the crisis resolution of banks.
ČILLÍKOVÁ, Júlia – DVOŘÁČEK, Vladimír – PÉNZEŠ, Peter: The second pillar of the Baking Unionand its challenges.Biatec, Vol. 21, 2013, No. 7/ September, p. 2-4.
Abstract: In June 2013 the European Commission published a proposal for a Regulation establishing a Single Resolution Mechanism as the second pillar of the so-called banking union. The main idea of this initiative is to shift the decision-making processes prescribed in the Bank Recovery and Resolution Directive from the local level to supranational level. The article summarises the main points of the proposal and outlines the challenges that will most probably need to be addressed when negotiations on the proposal take place at the EU level.
TÖZSÉR, Tomáš: Bank resolution in the EU.Biatec, Vol. 18, 2011, No. 10/ December, p. 12-18.
Abstract: The mechanisms for strengthening financial stability have shown serious weaknesses while dealing with bankruptcies of systemically important and international financial institutions. Thus the public resources have to be used to stabilise financial systems. Eventually, the net amount of financial funds which sovereign states have employed to bail out private financial corporations is not high: the International Monetary Fund has estimated the average net fiscal costs of direct assistance to the financial sector in the G-20 countries in 2009 at 2.8% of GDP and the Deutsche Bank (Schildbach, 2010) expects that the final direct cost of the crisis for taxpayers may remain below 1% of GDP in most developed countries. Nevertheless, these measures seem controversial as to their social and moral aspects. Their long-term economic efficiency is also questionable. The situation in the European Union is specific as the efforts for the single financial market have appeared to be in conflict with the lacking reliable mechanism for sharing the fiscal burden of individual countries when assisting cross-border banking groups in crisis. The article shows possible solutions to this conflict while discussing principles of an effective crisis resolution framework for credit institutions (based on the proposal of the European Commission).