The SRB, which was setup to ensure the resolution of banks in the EU, is still “very much a work in progress”, according to a new report from the ECA. Resolution is the restructuring of a failing bank in order to safeguard financial stability and public interests, with minimal costs to taxpayers.
The auditors identified shortcomings in the contingency plans for bank resolution prepared by the Single Resolution Board (SRB), which has been required to take on considerable responsibilities in a very short time span.
The SRB is a key element of the European Banking Union. Established in the wake of the 2008 financial crisis, its mission is to resolve failing banks with as little impact as possible on the financial stability and real economy of euro area Member States and others.
The auditors identified deficiencies in preparations for the full range of bank resolution arrangements that might be required. Although the SRB has worked long and hard to ensure that at least preliminary versions of their “resolution plans” are in place for most banks, those adopted so far do not meet the standards laid down, say the auditors.
“The set-up of the SRB from scratch was a very significant challenge”, said Kevin Cardiff, the Member of the European Court of Auditors responsible for the report. “Although its weaknesses must be seen in the start-up context, there is still a long way to go”.
Full press release
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