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  • Speech

Of temples and trees: on the road to completing the European banking union

Speech by Andrea Enria, Chair of the Supervisory Board of the ECB, at the Institut Montaigne, Paris, 17 May 2022

Paris, 17 May 2022


Thank you for inviting me to deliver this address at the Institut Montaigne. The Institut last year published a very topical report on the future of banking in Europe[1]. The analytical part of the report points out the apparent paradox of a banking sector that has re-built significant strength and resilience, but still shows structurally low profitability and depressed market valuations. Indeed, also from our supervisory perspective, we can be satisfied with the achievements of the regulatory reforms in strengthening banks’ balance sheets and the progress in dealing with the legacy of non-performing assets since the start of the banking union. This new resilience has proved fundamental in supporting households, small businesses and corporates during the pandemic, and is currently an important defence against the adverse effects of the war in Ukraine on our economy. At the same time, we have also identified the urgent need for banks to recover profitability, improve cost efficiency, invest in digitalisation and enhance the sustainability of their business model. Healthy profitability is the first line of defence in the event of shocks and a pre-requisite for banks’ ability to attract investors and raise capital if needed. Therefore, when the Institut’s report calls on banks to reinvent their business model, this resonates with us and is well aligned with the ECB’s supervisory priorities.

But the report also correctly laments the incomplete nature of the banking union and the fragmentation of our banking sector, requesting policymakers to “[…] play their part to revitalise the banking sector by relaunching the European project”.

This is the topic I would like to focus on today. In light of the current ongoing debate at Eurogroup level[2], I will argue that it is paramount we continue our progress towards completing the banking union. I will also highlight the areas in which, in my view, we should achieve progress as a matter of urgency, in order to support the necessary efforts banks are making to refocus their business model on a Europe-wide basis.

The banking union: temple or tree?

Since November 2014 European banking supervision has been responsible for the prudential supervision of the banking sector in the euro area and, since October 2020, in two more Member States – Croatia and Bulgaria – that entered into close cooperation agreements.

I would argue that the first pillar of the banking union has managed to deliver high-quality prudential supervision of the banking sector within our remit, which is actually the biggest in the world by asset size[3]. Still, it is fair to say that since the inception of the banking union there has been no noticeable improvement in the level of integration of the banking sector in the area we supervise. We all know that the legal framework applicable to European banking supervision has some shortcomings. For example, despite being a European institution, the ECB often needs to apply national legislation in the supervision of cross-border banking groups as it is not fully harmonised with directly applicable European law.[4] But while this has an undeniable adverse effect on the cross-border integration of EU banks, as I discussed last year in Ljubljana,[5] I do believe that European banking supervision has led to a truly unified exercise of supervisory responsibilities. If we ultimately want to identify the root causes of the lack of progress in the integration of the euro area retail banking sector, we need to look at the lessons learnt from the past and consider broader, more fundamental questions of institutional design in the European Union.

To illustrate this point, it is worth going back to the debate at the intergovernmental conferences[6] that led to the Maastricht Treaty being signed and the European Union being established.

Back then, in 1991, there were two competing schools of thought regarding the new European institutional framework, in particular in the work of the Intergovernmental Conference on Political Union.[7]

On one side were those who argued that the new union should resemble a Greek temple – an edifice with separate, or parallel, pillars. The Community method would apply only to the first pillar, the old European Economic Community including the single market and the newly established Economic and Monetary Union, while the second and third pillars on foreign and security policy and justice and home affairs would instead be run through intergovernmental arrangements.[8]

This was broadly the proposal for Treaty amendments presented by the Luxembourgish presidency in the first half of 1991, which was opposed by the Commission, the Parliament and some more integrationist Member States. Then, during the second half of 1991, the Dutch presidency tried to revive a Commission proposal where the Union structure would be more similar to a tree – with a single trunk but different branches for different policies[9]. While approval processes and voting majorities might well vary across the various branches, the fundamental tenets of the Community method – political and legislative initiative from the Commission, enhanced role of the Parliament and the jurisdiction of the Court of Justice – would apply to all the different policies. In this way the essential supranational, some would probably say federal, elements of the European architecture would be preserved.

In the end, the Greek temple structure won the day. And although some historians and political scientists may disagree, I would argue that institutional progress in the European Union has proceeded along those lines ever since. Whenever some specific institutional reforms risk crossing a critical political line in terms of depth and breadth of European integration, the intergovernmental elements of the new structure would become more prominent, enabling the Member States to retain control of the process.

All its differences notwithstanding, the banking union is not a fundamental exception to this overall template. In fact, in our institutional framework we also have three pillars: a single supervisory mechanism, a single resolution mechanism and a single deposit guarantee scheme. The problem with this structure is well-known – the three pillars are not working in sync. In my opinion, this is because the more we move away from the first pillar of the banking union, the more political and intergovernmental elements emerge.

For instance, it is worth noting that some crucial aspects of the Single Resolution Fund (SRF), a fundamental element of the second pillar of the banking union, were implemented through an ad hoc intergovernmental agreement[10] based on a decision of the finance ministers at the Economic and Financial Affairs Council meeting of 18 December 2013. This was done to address the legal and constitutional concerns voiced in some Member States, related in particular to the transfer of contributions to the Fund and their mutualisation.[11]

At the same Council meeting, again following the intergovernmental logic, the finance ministers also issued a separate statement on the backstop to the SRF, which was embedded within the European Stability Mechanism – another intergovernmental institutional body, which originated from a different intergovernmental Treaty during the sovereign debt crisis in 2012.

The final agreement on the backstop to the SRF, which is part of the Agreements Amending the Treaty Establishing the European Stability Mechanism and the original SRF Agreement, and which was finally agreed in January 2021[12], is expected to come into force soon, once the last few Member States complete the process to ratify the agreed changes.

Moreover, the provision of the SRM Regulation[13] that allows the Council to object to a resolution scheme within a 24-hour window clearly points towards a degree of political control of resolution decisions, specifically when the use of the SRF is involved.

Close collaboration between all parties concerned – the ECB, Single Resolution Board (SRB), Commission, national supervisory and resolution authorities – has helped us to effectively deal with each and every crisis since the start of the banking union. However, there is no denying the additional complexity inherent in the intergovernmental route.

Progress has also been difficult in establishing the third pillar of the banking union – a single, fully integrated deposit guarantee scheme providing the same degree of protection to all depositors, regardless of the Member State in which they hold their deposits. A legislative proposal from the Commission is now almost seven years old, and finance ministers are still locked in lengthy and difficult negotiations on a roadmap to completing the banking union.[14]

Metaphors can sometimes be tedious but I believe they can be helpful in illustrating a wider point: looking at the banking union as three separate and almost independent pillars, at least from a political perspective, has so far not allowed us to advance towards an integrated approach ensuring its completion.

A unitary approach to the banking union

There is a very strong intellectual case for approaching the banking union as something unitary instead – to see it as a single tree, with its different branches working in sync. Even though he used the traditional metaphor of a temple, former ECB President Mario Draghi described this aspect very well. I quote:

“There can […] only be a single money if there is a single banking system. For money to be truly one, it has to be truly fungible independent of its form and independent of its location. In particular, deposits, which are the most widespread form of money, have to inspire the same level of confidence wherever they are located.

To ensure that deposits are truly as safe everywhere across the euro area, the likelihood that a bank fails has to be independent of the jurisdiction where it is established. Resolution has to follow the same process in the event that a bank fails. And, when push comes to shove, depositors must be afforded similar protection wherever they are located.

Fundamentally, this was and remains the agenda of the banking union. And it is why the banking union was conceived with three pillars: a single supervisory mechanism, a single resolution mechanism, and a uniform deposit insurance scheme, which remains to be specified. For money to be truly one, we need all three. Supervision had to come first, not because it was the easiest to establish, but because it was the necessary condition to proceed with the other pillars of the banking union”.[15]

We usually think of a currency as the banknotes and coins we have in our pockets, but in reality most of it comprises bank deposits. If one euro deposited in a Member State is perceived to be less safe because the local deposit guarantee scheme has a lower amount of available resources and the credit standing of the sovereign providing the backstop to that guarantee scheme is lower, then the integrity of the single currency is in danger and, in a crisis, we run the risk of deposit outflows towards other Member States. Ultimately, only a fully-fledged European deposit insurance scheme (EDIS) will be able to address this issue.

Furthermore, for as long as the crisis of a cross-border group can have an impact on national safety nets, national authorities will prefer domestic legal entities to maintain relatively high levels of capital and liquidity. This is why, after the great financial crisis, several Member States requested to keep specific provisions in European legislation to limit the scope for an integrated management of capital and other resources within cross-border groups and when European liquidity requirements were introduced, existing limitations on intra-group cross-border large exposures made it impossible to grant waivers for solo requirements. The end result is that the single market is not as “single” and the banking union not as “unified” as they were meant to be. As a matter of fact, the European banking sector today remains broadly segmented along national lines.

In short, I would contend that only by looking at the banking union as a unitary system will we be able to make progress on all its aspects. Maybe the metaphor of a tree with separate branches as a unitary living entity is indeed useful here. Yet, the Greek temple approach prevailing in the current debate tends to cloud the perspective and hugely complicate political discussions aimed at achieving an overall agreement.

Covered deposits in the euro area amounted to around €6.7 trillion at the end of 2020,[16] more than half the gross domestic product of the entire euro area. Covered deposit volumes grew during the pandemic, as household savings tended to increase, and according to SRB’s estimates they will approach the €8.0 trillion threshold by the end of 2023, i.e. at the end of the build-up phase of the SRF.[17]

This staggering amount can be the source of a certain misconception – or at least a misperception – among national policymakers, which makes an agreement on completing the banking union even more difficult. The immediate reaction to this enormous amount on the part of many national governments is the fear that the national budgets will be required to underwrite a joint and several guarantee for all those covered deposits. Sooner or later, so the reasoning goes, that guarantee will be called in, triggering a massive disbursement of taxpayers’ money to support banks in other Member States.

Nonetheless, I am inclined to believe that if we look at this issue in a comparative perspective, having in mind in particular the experience from the United States and the role of the Federal Deposit Insurance Corporation (FDIC) for mid-sized banks, the actual likelihood that a guarantee on such an eye-watering amount of money will be called in is very low indeed.

Taking as the most relevant example the US experience during the great financial crisis of 2008-13,[18] that period saw 489 small/medium bank failures managed by the FDIC for an overall amount of assets held in those banks of USD 683 billion.[19]

Only in 26 cases, with a total asset value of USD 16 billion, did the FDIC actually use the option to liquidate the bank’s assets and pay out the deposits. In all the other cases the FDIC implemented various types of purchase and assumption (P&A) transactions, i.e. acquisition of assets and assumption of liabilities by another credit institution.

I could discuss at length the technicalities of such instruments, but I think that for our purposes it is important to grasp only their general features. When a bank fails, the FDIC is appointed receiver by the chartering authority after the charter is revoked. The foremost preoccupation of the FDIC at this stage is to find an acquirer for all, or at least a significant part of the assets, with an assumption of corresponding liabilities of the failed bank.

Usually, at least the insured deposits with a certain amount of assets are all transferred to another bank. Other liabilities can also be assumed, in particular non-covered deposits.

To this end, the FDIC carries out what is called “franchise marketing”, looking for the best candidate to take over the franchise of the failed bank through a competitive bidding process. All the assets and liabilities which are not acquired or assumed are left behind in the receivership and the FDIC keeps managing those assets in order to extract the most value to pay the remaining creditors. The transaction is also subject to the least cost test compared with the alternative of liquidating the bank and paying out the deposits.

Needless to say, funding this process is of the essence. Depending on the perimeter of the franchise which is transferred, there may well be a mismatch between assets purchased and liabilities assumed. A higher amount of liabilities will lead to an equity shortfall and the acquiring bank would normally ask the FDIC to fill the gap.[20]

Interestingly, considering the difficulties in the valuation of assets of a failed bank, the FDIC can also offer the acquirer loss share guarantees for the assets transferred in order to indemnify at least part of the potential losses – up to an established limit – deriving from a purchased portfolio (loss-share P&A). This tool was used very often during the great financial crisis.

For the more than 450 P&A transactions of failed banks carried out during the great financial crisis, the overall cost to the Deposit Insurance Fund (DIF), which in the United States is also used to finance resolution activities, was around USD 68 billion. In line with the logic of the least cost test, liquidating those banks and paying out covered deposits would have been more expensive for the DIF.[21] Furthermore, we should not lose sight of the fact that such fairly large amounts did not trigger any fiscal backstop, as the resources came from banks’ contributions, which were promptly reintegrated in the following years.[22]

Hence, the mechanism for preventing a massive cross-subsidisation of losses across Member States exists and is readily available to us. But the political concerns prevailing in national capitals are likely to hamper progress towards an integrated EDIS. In the worst-case scenario, the red lines drawn by various Member States could cause a very damaging stalemate and the postponement of any progress. The immediate result would be to perpetuate the current segmentation of the European banking market. This would hinder the necessary reorganisation of the business model of many banks and it would preserve structural inefficiencies at this critical juncture, when the sector’s support in the double challenge of the digital and green transitions of our economy is much needed.

First and foremost: reforming the crisis management framework and clearing prudential obstacles to cross-border integration

In fact, I would argue that the absolute priority is to continue moving forward towards completing the banking union. Faced with criticism of his so-called “bicycle theory”,[23] whereby if economic integration stops moving forward, it will “fall over”, Jacques Delors continued to nonetheless assert its importance to the European project. The ability to compromise is always preferable to leaving the negotiating table, and limited progress is always preferable to no progress at all. But the agreement needs to include some elements of substance, a concrete improvement in the functioning of the current institutional set-up, and the capacity to build the trust necessary for taking the next steps towards completing the banking union.

So, what are the key elements of a positive agreement?

I believe the first issues we must tackle are upgrading our crisis management framework for mid-sized banks and reviewing the approach for ensuring an appropriate distribution of capital and liquidity within cross-border banking groups. While the resolution of large banking groups is more integrated at the EU level, it is particularly important to enhance and facilitate the SRB’s recourse to the sale-of-business tool for mid-sized banks. This would, in turn, also help ease certain contentious issues relating to the establishment of a common EDIS. In parallel, it is essential to entrust the authorities of the banking union (ECB and SRB) with effective powers to ensure their prudential supervisory tools[24] are calibrated in the most appropriate way to balance group-wide interests with legitimate concerns at the national level of each legal entity. This approach would be a real step forward compared with a rigid, one-size-fits-all, legislative regime, and could also be implemented in the absence of a fully-fledged EDIS.

I believe we have already identified the fundamental elements for upgrading our crisis management framework, although merely identifying them does not make them any less controversial or easier to implement.[25] First of all, we need to expand the pool of banks which qualify for resolution, as this would strengthen reliance on European procedures for banks that have meaningful size and potentially also cross-border business within the banking union. Also, a harmonised framework for administrative liquidation should be introduced, allowing those smaller banks that cannot be placed in resolution to be safely removed from the market, with common procedures across the banking union that are overseen by a European institutional body. The latter point is important, as the variety of approaches followed by national authorities for mid-sized banks in recent years crystallised a lack of trust amongst Member States, and is one of the obstacles on the road to completing the banking union. Finally, if we want to be able to act swiftly and effectively as the FDIC is able to do when a bank fails, we need to be sure that we are actually able to deploy all the necessary resources to fund failing banks’ smooth exit from the market.

This point merits clarification, as the deployment of financial resources is always the most contentious issue, even when discussing the use of fees levied on banks for this purpose. Two aspects are of fundamental importance here: how to deploy the resources available in the SRF, and also how to mobilise resources in national deposit guarantee schemes for crisis management measures, beyond just the reimbursement of depositors.

We do in fact have a significant amount of resources readily available within the banking union. As already mentioned, the Vice-Chair of the SRB recently announced[26] that the SRF will amount to an estimated €80 billion (1% of all covered deposits of authorised banks in all the participating Member States) by the end of 2023. The latest available data[27] indicate that at the end of 2020, national deposit guarantee schemes collectively totalled some €37 billion, and should reach 0.8% of covered deposits by the end of 2023. All in all, the amount of total resources is in the same ballpark as in the United States, where the FDIC has an objective of a 2% reserve ratio, but which at the end of 2021 stood at 1.27%, or USD 123 billion.

However, the EU is more constrained in its ability to deploy those resources on a least cost basis than the United States. Funding from the SRF can be disbursed only after at least 8% of liabilities have been bailed in, which for many mid-sized banks, unlike for large cross-border groups, would imply digging deep into the uninsured depositors’ base. Moreover, in 15 Member States across the banking union national deposit guarantee schemes can only be used to repay depositors and cannot support sales of business or other crisis management tools, even when this implies lower disbursement of resources. But also in the remaining six Member States, where national deposit guarantee schemes could perform a wider range of functions, a narrow application of the least cost test coupled with the super-priority of deposit guarantee schemes after paying out covered deposits makes it really difficult to yield a positive least cost test.

Authorities including the ECB have already suggested eliminating the super-priority of deposit guarantee schemes, and granting a general depositor preference, also including uncovered deposits, as is the case in the US system.[28] Coupled with harmonised rules for utilising deposit guarantee scheme resources to support crisis management actions, this could significantly enhance the flexibility of our framework, as well as its ability to ensure the smooth exit from the market of a number of mid-sized banks. Finally, this function of national deposit guarantee schemes to support effective crisis management could also be extended to unlock access to the SRF, by helping to finance the gap to the 8% threshold for bail-in of liabilities in resolution, and preventing a destabilising effect which may discourage recourse to the Fund.

I believe these reforms would be sufficient to significantly improve the functioning of our framework, even in the absence of a fully-fledged EDIS. By building trust in the functioning of our crisis management tools, this could also allay some Member States’ concerns on possible mutualisation of bank losses in a crisis scenario, thus helping the transition to a complete banking union.

However, an important component would still be missing. In the coming years European banks will have to fundamentally review, or, in the words of the Institut’s report, “reinvent” their business model in the quest to improve their efficiency and profitability. At the moment, they are still looking at the banking union as a patchwork of national markets, rather than their domestic market. Their choice of scale, business mix and geographic footprint are, and will continue to be, deeply affected by the institutional environment of today. I am convinced that European policymakers need to now send out a clear message that the current segmentations within the banking union will be phased out.

Once again, it is the burden of the past that creates obstacles for current progress. In fact, firms with no or a limited history of a presence in European markets face a different set of incentives. For instance, banks relocating from the United Kingdom after Brexit chose to establish integrated structures within the banking union, via the adoption of the European Company Statute and a branch structure as the main channel for the distribution of services across Member States. Likewise, fintech companies have also started providing services across Member States within unified structures, often relying on branches or cross-border provision of services. But we cannot achieve meaningful integration of our national banking markets without dealing with the treatment of subsidiaries of core European banking groups.

I know this point generates deep divisions in European debates. But I believe the terms of the debate are misconstrued. The dilemma is not whether to maintain significant legal barriers to the transfer of capital and liquidity within a cross-border group, or completely remove all legislative requirements at individual level, allowing banks to centralise all available financial resources at parent company level. There is a third way. A solution that stems naturally from the metaphor of the tree and its branches which I recommended for all areas of the banking union.

Member States should entrust the authorities of the banking union, the ECB and the SRB, with powers to ensure an appropriate balance of prudential requirements in order to guarantee that the group and each of its subsidiaries within our single prudential jurisdiction are resilient and capable of supporting their customers, also in distressed situations. To this end, EU legislation should directly empower European authorities to require banks to maintain an appropriate level of capital, eligible loss-absorbing liabilities and liquidity also at the level of each subsidiary, and rely on recovery and resolution plans to make sure that losses can be properly distributed across the group and liquidity can flow where needed at times of stress. We, as prudential and resolution authorities for the whole area, will then tailor the requirements to the specific business model of each bank and enable a greater pooling of resources where arrangements for group support in case of stress are more robust and reliable.[29] The same governance of our supervisory powers should provide sufficient reassurance of a balanced outcome: Joint Supervisory Teams are built around close collaboration between staff from the ECB and national competent authorities, and the latter are also widely represented in the Supervisory Board, the main decision-making body of the ECB on these matters.

We should remind ourselves that the banking union was built precisely also to prevent the disruptive home-host struggles that occurred during the great financial crisis, which in many cases led to the break-up of integrated cross-border groups along national lines in order to manage their crisis only with the then available national resources. We built an institutional framework, such as European banking supervision, and we also accumulated a significant amount of resources, precisely to help manage this type of situation and decide what is best in the European interest, avoiding the destruction of value that occurred during the financial crisis.

The ECB is the competent prudential authority for significant institutions at consolidated level, and also for each individual subsidiary of a banking group within the banking union. By design, the banking union eliminates home-host tensions as the ECB is at once responsible for both the parent companies, and their subsidiaries wherever they are located. This ensures that any potential conflict is internalised in our decision-making process. We just need to put our trust in the institutional mechanisms currently in place. A tangible sign in this direction within the latest banking package currently being discussed, substituting rigid legislative provisions with an empowerment of European authorities, would send out an important message that we are finally turning a new page and a different, European, attitude is now prevailing. This would, in turn, help support a more integrated, European approach in the “reinvention” of our banks’ business model.


It was my intention today to discuss with you certain fundamental aspects related to the completion of the banking union. At ECB Banking Supervision we strongly believe that it is fundamental for the future of the European banking sector that this institutional process is completed as soon as feasibly possible.

I am well aware of the significant political obstacles that lie on the road to establishing, in particular, a single European deposit guarantee scheme. But, as I have tried to demonstrate today, I believe that if we approach the issue in a sensible and pragmatic way, we can overcome many of the political concerns that still stand in the way of a final agreement.

I really hope that the ongoing negotiations in the Eurogroup bear fruit soon, but I firmly believe that only by looking at the banking union as a unitary framework will we be actually able to progress in all of its branches.

The first branch, European supervision, is fully operational. The second branch has proven its value and effectiveness, also in recent cases, but its scope and operational flexibility could be enhanced with targeted reforms. And as progress is made to deliver an efficient and effective crisis management and resolution framework, also for mid-sized banks, the final step towards completing the banking union – a comprehensive European deposit insurance scheme – will ultimately be achieved.

Upgrading our crisis management framework therefore needs to be a key component of any agreement on the completion of the banking union. I would argue that even in the absence of agreement on the other pieces of the jigsaw puzzle it would be important for the Commission to promote reform of the European crisis management framework along the lines suggested above.

But while the branches of our tree grow stronger, we cannot waste any more time by not fostering greater cross-border integration of our banking market. A banking union is nothing more than an empty promise if banks do not view it as the definitive perimeter within which they develop their own strategy, if they do not see it as a truly domestic market for retail banking services upon which they can also build their global franchise. A pragmatic way forward, building upon the achievements of the single supervision and the single resolution mechanisms, would be to entrust the responsibility to ensure a balanced distribution of financial resources within a cross-border group, including support from the parent company to the subsidiaries, to the EU institutions of the banking union, ending the current reliance on legislative constraints that ring-fence capital and liquidity along national lines.

Thank you very much for your attention.

  1. See Institut Montaigne (2021), Reinventing the European Banking Sector, November.

  2. See Council of the European Union (2022), “Remarks by Paschal Donohoe following the video conference of the Eurogroup of 3 May 2022”.

  3. By the end of the second quarter of 2021 the ECB directly supervised 114 significant credit institutions and banking groups comprising around 1200 separate legal entities with a banking license. The overall amount of assets of those significant supervised entities is around €25 trillion, plus around €7 trillion of assets held in less significant credit institutions. By comparison, even though calculations may vary due to differences in the applicable accounting framework and volatility in the exchange rate, the overall amount of assets of the US banking sector is around €17 trillion.

  4. This is due to a combination of the legal basis for the Capital Requirements Directive provided by Article 53.1 of the Treaty on the Functioning of the European Union and the persistent use of options and discretions for Member States provided for in the Capital Requirements Regulation. On those complex legal issues see Bassani, G. (2019), The Legal Framework applicable to the Single Supervisory Mechanism. Tapestry or Patchwork?, Kluwer Law International.

  5. See Enria, A. (2021), “How can we make the most of an incomplete banking union?”, speech at the Eurofi Financial Forum, Ljubljana, 9 September.

  6. The Intergovernmental Conference on Economic and Monetary Union and the Intergovernmental Conference on the Political Union.

  7. See Wall, S. (2008), A stranger in Europe. Britain and the EU from Thatcher to Blair, Oxford University Press, Oxford, pp.124-125; Wall, S. (2020), Reluctant European. Britain and the European Union from 1945 to Brexit, Oxford University Press, Oxford, pp. 207-209.

  8. Needless to say, the inclusion of Economic and Monetary Union in the first communitarised pillar was possible only thanks to the opt-outs granted to some Member States.

  9. See European Commission (1991), “Intergovernmental Conferences: Contributions by the Commission”, Bulletin of the European Communities, Supplement 2/91. Regarding the draft of the Luxembourgish presidency, the Commission states on page 70: “The Commission, supported by Parliament and some of the Member States, voiced its real concern at the risk of the Community breaking up and presented the IGC with a paper on the structure of the Treaty in which it reaffirmed the principle of a unitary Community”.

  10. See Council of the European Union (2014), Agreement on the transfer and mutualisation of contributions to the Single Resolution Fund, 14 May. The agreement was actually signed by 26 Member States, all except the UK and Sweden, on 21 May 2014.

  11. See Council of the European Union (2013), “Press Release 3281st Council Meeting, Economic and Financial Affairs (continuation)”, 18 December; Council of the European Union (2014), “Member states sign agreement on bank resolution fund”, press release, 21 May.

  12. See Council of the European Union (2021), “Statement by the Eurogroup President, Paschal Donohoe, on the signature of ESM Treaty and the Single Resolution Fund Amending Agreements”, 27 January..

  13. 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 and amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1).

  14. See Council of the European Union (2022), op. cit.

  15. Draghi, M. (2015), “One year of ECB Banking Supervision”, speech at the ECB Forum on Banking Supervision, 4 November, Frankfurt am Main.

  16. Data are available on the European Banking Authority website.

  17. De Carpentier, J.R. (2022), Single Resolution Fund on track for €80 billion by end 2023, blog post, 2 May

  18. FDIC (2017), Crisis and response. An FDIC History, November. See in particular Chapter 6, Bank Resolutions and Receiverships.

  19. This amount also includes the whole-bank P&A transaction for Washington Mutual with a balance sheet total of USD 307 billion, to date the largest bank failure in the history of the FDIC.

  20. Other resources might clearly also be needed to manage the assets left in the receivership.

  21. By FDIC’s estimates, the largest part of the costs came from the loss-share P&As (USD 57 billion out of USD 68 billion). In this case it was estimated that liquidating those banks and paying out deposits would have amounted to an additional cost of USD 42 billion. Hence, liquidating the banks subject to the loss-share P&A would have cost USD 57 billion plus USD 42 billion. See FDIC, op. cit., p. 202.

  22. See FDIC, op. cit. Chapter 5, Deposit Insurance: Fund Management and Risk-Based Deposit Insurance Assessments, in particular pp. 156-162.

  23. Delors, J. (2001), “Where is the European Union heading?”, Presentation made during a series of conferences in the United States, March.

  24. Capital requirements, minimum requirement for own funds and eligible liabilities, liquidity requirements and recovery and resolution plans.

  25. See, among others, Enria, A. (2021),Crisis management for medium-sized banks: the case for a European approach”, keynote speech at the Banca d’Italia workshop on the crisis management framework for banks in the EU, Frankfurt am Main, 15 January.

  26. See De Carpentier, J.R., op. cit..

  27. See footnote 16 above for more details.

  28. For a more in-depth analysis, see ECB contribution to last year European Commission’s targeted consultation on the review of the crisis management and deposit insurance framework.

  29. See for instance the proposal made in the blogpost I wrote with Édouard Fernandez-Bollo, Fostering the integration of cross-border banking groups in the banking union, the Supervision Blog, 9 October 2020.


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