BaFin

Topic Recovery/resolution Resolution

BaFin has been Germany's national resolution authority (NRA) since 1 January 2018. The legal basis for this is the German Recovery and Resolution Act (Sanierungs- und Abwicklungsgesetz – SAG).

From 2015 to 2017, the Federal Agency for Financial Market Stabilisation (Bundesanstalt für Finanzmarktstabilisierung – FMSA) acted as Germany's national resolution authority.

As a resolution authority, BaFin is part of the Single Resolution Mechanism (SRM). The SRM consists of the Single Resolution Board (SRB) based in Brussels and the national resolution authorities of participating Member States. In addition to the SRB, the Single Resolution Fund (SRF) was established as the second core element of the SRM. The SRF is financed by bank levies.

Tasks of the NRA

The NRA has extensive powers to resolve institutions in an orderly manner. These powers include, in particular, the following tools: bail-in of shareholders and creditors, sale of business, transfer to a bridge institution and transfer to an asset management company.

The NRA prepares resolution plans for institutions and assesses their resolvability. Resolution plans for significant institutions are prepared together with the SRB. If an institution is showing signs of distress, the NRA prepares resolution measures and implements these if necessary.

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Publications on this topic

Bail-ins: in­sur­ers as in­vestors in cred­it in­sti­tu­tions

Since 1 January 2017, it has been possible for troubled institutions to draw on unsecured debt instruments should they become insolvent and to do so directly after recourse to the owners – this being the shareholders in most cases – and subordinate creditors. This process is based on a tool referred to as “bail-in”.

Glos­sary of Terms Used in the CRR and CRD IV

German-English translation, glossary provided by BaFin's language service

Clas­si­fi­ca­tion of cer­tain li­a­bil­i­ties of CRR in­sti­tu­tions un­der in­sol­ven­cy law

The German Resolution Mechanism Act (Abwicklungsmechanismusgesetz) of 2 November 2015 (Federal Law Gazette I, 2015, page 1864) laid down the new provisions of section 46f (5) to (7) of the Banking Act as amended, thus altering the ranking of certain liabilities of CRR institutions (CRR credit institutions and CRR investment firms) under insolvency law. The amendment, which reads as follows, will …

Sin­gle Res­o­lu­tion Board: "Pre­ven­tion is bet­ter than cure"

The Single Resolution Board (SRB), the European resolution authority, was created at the beginning of 2015. It is part of the second pillar of the European Banking Union, the Single Resolution Mechanism (SRM). Already during the set-up phase, the SRB was, together with the national authorities, responsible for resolution planning for the banks directly supervised by the European Central Bank (ECB) …

Bank res­o­lu­tion: Se­nior­i­ty of li­a­bil­i­ties not el­i­gi­ble for bail-in makes in­sol­ven­cy pro­ceed­ings eas­i­er

The collapse of the US investment bank Lehman Brothers showed just what sort of shock waves the insolvency of one credit institution can send through the financial markets. Since the financial crisis, regulators at both national and international levels have been pulling out all the stops to try to make banks more resilient and financial markets more stable. For instance, banks may no longer …

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