The Irish Banking Federation welcomes today’s vote by the European Parliament to approve the Single Resolution Mechanism (SRM), the second pillar of European Banking Union. The new legislation will provide for improved clarity and efficiency for the decisions to be made under the new mechanism that determines whether Eurozone banks need to be placed into resolution.
The creation of the SRM – with a central decision-making board and a single resolution fund of €55 billion – will ensure that resolution decisions across participating member states will be taken in a coordinated and effective manner. It should also help to minimise negative impacts on financial stability and break the link between banks and sovereigns thereby protecting taxpayers’ money in the future.
Commenting on today’s vote, IBF Chief Executive, Noel Brett said:
“Today’s vote by the European Parliament is a significant step which paves the way for a fully operational Banking Union. IBF welcomes the autonomy of the Single Resolution Board to make clear decisions on how best to resolve failing banks which will ultimately minimise the impact of a bank failure and avoid the need for taxpayer support.”
“There are however some key elements of the mechanism which have yet to be clarified. Details of how the €55 billion resolution fund will be financed will not be outlined until later this summer and IBF will be monitoring this closely to assess how this will impact on banks in Ireland.”
The SRM will enter into force on 1 January 2015, with bail-in and resolution functions applying from 1 January 2016.
Note: The Irish Banking Federation (IBF) is the principal voice of the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here