Accountability in the SRB

• Author: Brito Bastos, Filipe; Zeitlin, Jonathan
• Pages: 22-25

IPOL | Economic Gove rnance Support Unit

22PE 645.747

legality of those instructions, once the NCA adopts decisions in res pect of the cr edit ins tit ution s (Türk

and Xa ntho ulis 2019).

3.3.6.Scope of t he ECB’s m andate to app ly national law

One of the most unique legal issues of the SSM concerns the ECB’s mandate to apply national law. It is

a mandat e without precedent in any other field of EU law. Article 4(3) SSMR prov ides: “For th e purpose

of carrying out the tasks conferred on it by this Regulation, and with the objective of ensuring high

standards of supervision, the ECB shall apply all relevant Union law, and wherethis Union law is

composed of Directives, the national legislation transposing those Directives. Where the relevant

Union law is composed of Regulations and where currently those Regulations explicitly grant options

for Member St ates, th e ECB shall apply als o th e nat ional legis latio n exercising tho se optio ns.”

What exactly “national law transposing directives” means has remained a matter of intense debate

amon g academics a nd pra ctitioners (Wit te 2016; de Guindos 2019; Prek 2019). The ECB m ay certainly

apply nationa l laws that implemen t verba tim pro visions of th e Capit al Req uiremen ts Direct ive, or

national legislation enacted specifically to transpose EU Directives in banking law. What is more

controversial is whether, for instance, the ECB must apply national laws which, though not adopted

specifically to transpose EU Directives or even precede those Directives, are presupposed by the

national laws that NCAs would have to apply. One author points out, for instance, that the ECB is not

subject to national administrative law, but that its mandate to apply national law arguably should

include the national procedural rules concerning NCAs’ deadlines to take decisions (Arranz 2017;

Wissin k 2017).

4.ACCOUNTABILITY IN THE SRB

4.1.Purpose and architecture

The Single Reso lution Mechanism (SRM), which constitutes the second pillar of the Banking Union, has

the primary purpose of providing a uniform framework for the orderly resolution of failing banks in a

manner which reduces the potential costs to taxpayers, and which protects depositors, as much as

possible. To t hat end, a n ew EU Agency has been set up, th e Single Resolution Board (SRB). The SRB has

an especially import ant role when the recovery of a bank becomes unlikely. It drafts resolution plans

and tak es the lead in initiating the r esolution pr ocess, if need be by resor ting to th e Single Resolution

Fund (SRF), owned by the SRB and financed by contributions from credit institutions that fall under the

scope of the S SM.

Much as in the SSM, the responsibility for the resolution of banks isdivided between National

Resolution Authorities (NRAs) and the SRB depending on their size. In broad terms, the SRB has

juris diction over the s ignifica nt credit inst itutions th at fa ll under the su pervisor y jurisd iction of t he ECB

in the SSM; NR As h ave ju risdict ion o ver les s s ignificant credit institu tions.

The governance of the SRM is notoriously complex, and its decision-making processes involve “close

cooperatio n” between the SRB and NR As, as well as coopera tion between the SR B, the ECB (which has

an important role in assessing whether a bank is failing or likely t o fail), the Commission, and the

Council. Part of this complexity results from the fact that, unlike the ECB, the SRB is neither an EU

institution nor an EU body established in the Treaties, which implies that only limited and clearly

circumscribed powers could be delegated to it under the CJEU’s Meronidoctrine (see fo r instance Case

C-270/12, United Kingdom v European Parliament and Council (ES MA)). For that reason, the final decision

on the resolution of a credit institution must be taken by the Commission and the Council, even though

measur es to res olve a bank are pr oposed by the SRB.