Those despairing of European regulatory timelines may take small comfort in today’s Council announcement that the Single Resolution Fund (SRF) will enter into force as expected on 1 January 2016. The SRF is a vital element in the wider Single Resolution Mechanism, creating a Europe-wide backstop fund that may be accessed following a failing institution’s recourse to creditors and shareholders via bail-in.
As of today the intergovernmental agreement (IGA) has been ratified by at least 90% of the weighted aggregate votes of all participants. The IGA was signed in May 2014 by all member states except Sweden and the UK, those countries which have signed ahead of their membership of the EEA, will only become subject to SRF obligations when they join the single supervisory and single resolution mechanisms. The IGA mandates an eight-year phased-in contribution by credit institutions, finally amounting to 1% of covered deposits, or approximately EUR 55bn. The mutualisation from the national level to the central SWF is front-weighted, 40% in 2016, plus 20% in 2017, followed by equal increments over the next six years.Contact Us