On 10 March 2014, the Presidency of the Council of the EU published a report on the EU Parliament’s proposed amendments to the regulation establishing the single resolution mechanism (SRM).
Conscious that the legislative term of the Parliament ends with elections in May and of the Parliament’s pledge to ‘go it alone’ and vote on its preferred draft if there is no agreement in trilogue, the Presidency sought an updated mandate on the outstanding issues in an effort to agree a compromise position. In brief, those issues are:
- The EU Parliament’s continued resistance to any involvement of the Council in a resolution scheme and demands that decision-making processes are made shorter and more simple;
- The EU Parliament’s demand that the European Central Bank (ECB) be the only authority to decide whether a bank is ‘failing or likely to fail’. In contrast, under the Council’s “General Approach”, the Single Resolution Board (SRB) or a national resolution authority on their own initiative could also make this decision;
- The types of decisions to be taken by executive, as opposed to the plenary sessions, of the SRB. The Presidency had suggested two compromise positions to bridge the gap between the Council’s “General Approach”, which envisaged a larger role for the plenary session, and the Parliament’s belief that all resolution schemes should be adopted by the executive;
- The voting regime in the plenary session of the SRB;
- A loan facility to the Single Resolution Fund (SRF), the continued absence of which remained a major concern of the Parliament; and
- Contributions to the SRF.
In response, on 11 March 2014, the Council published a press release summarising discussions at the latest ECOFIN meeting. It confirmed that it had revised the mandate given to the Presidency and called for a conclusion of the trilogue process in time for the Parliament’s plenary session scheduled for 14 to 17 April, so as to enable the SRM regulation to be adopted before the end of the Parliament’s current term.
In a statement, Commissioner Michel Barnier provided a bit more detail as to the nature of the revisions to the Presidency’s mandate, claiming that progress had been made on a number of fronts, including
- Clarification of the resolution “trigger”;
- Clarity over the allocation of roles between the executive and plenary sessions of the SRB;
- Streamlining of the decision-making rules of the SRB; and
- Securing agreement on the parameters for calculating bank contributions to the SRF.
However, on the issue of “who pushes the button” and decides whether a bank is ‘failing or likely to fail’, M. Barnier confirmed that the Council had decided not to change the balance of roles between the Council and Commission, despite the suggestion from the Presidency that the Parliament’s position represented an acceptable compromise.
Whilst progress has definitely been made, the Council accepts that it has rejected one of the key demands of the Parliament regarding the SRM. The next instalment of trilogue discussions took place yesterday, but the results are as yet unknown. Commissioner Barnier recognised that the two sides remained “very divergent” and the Parliament is feeling feisty, so expect fireworks…