The Council of the European Union formally adopted its first-reading position on a proposed regulation amending the Single Resolution Mechanism (SRM) Regulation on 3 May 2026, establishing its unified mandate for upcoming trilogue negotiations with the European Parliament. The position aims to enhance the EU's banking crisis management and resolution framework by expanding the Single Resolution Board's (SRB) toolbox for earlier intervention, clarifying resolution conditions, and modifying Single Resolution Fund (SRF) rules.
The Council's position introduces several amendments to improve the efficiency and predictability of bank resolution. Key provisions include expanding the SRB's toolbox for earlier and more graduated intervention in struggling banks, clarifying the conditions for declaring a bank 'failing or likely to fail' and the application of the 'public interest' criterion, and modifying rules for the use of the SRF, including provisions on mutualised funding and liquidity in resolution. The text reflects a compromise among member states, balancing the need for a more robust harmonised framework with national supervisory responsibilities and fiscal concerns.
Policy orientations and trade-offs The Council's position navigates several trade-offs. On one hand, earlier intervention powers for the SRB aim to prevent bank failures from escalating, protecting financial stability and reducing reliance on taxpayer-funded bailouts. On the other hand, this expands EU-level authority over national banking supervision, potentially limiting member states' discretion. Clarifying resolution conditions seeks to provide legal certainty for banks and investors, but may also reduce flexibility for national authorities in handling idiosyncratic cases. Modifying SRF rules aims to ensure credible funding arrangements without national budget exposure, yet mutualised funding raises concerns about cross-border risk-sharing among member states.
Impact on stakeholders The proposed changes will have significant implications for key stakeholders. EU banks will face clearer resolution procedures but may also experience earlier regulatory intervention, increasing compliance costs. The SRB gains enhanced powers and tools, strengthening its role in crisis management. National resolution authorities will see their responsibilities adjusted, with some discretion transferred to the EU level. EU taxpayers stand to benefit from reduced risk of bailouts, though mutualised funding could create moral hazard concerns.
Expected institutional follow-up With the Council's position adopted, trilogue negotiations with the European Parliament will commence. The Parliament adopted its own position earlier, and the two institutions must reach a compromise on the final text. The outcome will determine the effectiveness of the reforms in creating a more resilient banking union.
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