The 2007 financial crisis has exposedmajor weaknesses in global financial systems, including thethreat to financial stability posed by banks that were toobig, interconnected and complex to be closed or go bankrupt.As a result, many banks have been rescued using publicsupport, allowing for an uninterrupted provision of theirservices, but effectively shifting (most) of their losses totaxpayers instead of banks’ owners or investors.Thepolitical realities following the bail-out of banks calledfor game-changing regulation to reduce both the likelihoodand the impact of failure.The Banking Recovery andResolution Directive (BRRD) became one of the most importantbuilding blocks of the Banking Union. The BRRD is theoutcome of a long negotiation process. The new bank recoveryand resolution framework has wide reaching implications,both within the EU but also for countries with bankingrelationships with the EU. This Guidebook aims to explainthe scope, the principles, and the rationale of the BRRD andrelated secondary legislation and guidance. Expertcontributors, including lawyers and academics, share in thisGuidebook their experience of and insights to the BRRDnegotiation process, recovery and resolution planning,adoption of resolution decisions and the negotiation ofbail-in. The Guidebook also raises awareness ofdiscretionary or non-regulated areas and provides someinitial thoughts for further development and possibleimplementation challenges. These challenges include but arenot limited to the management of potential conflict ofinterests, the application of the public interest test, thechoice of resolution tools, and the interaction betweencross-border regulations. The Guidebook, together with theaccompanying case studies, should help FinSAC clientcountries understand the resolution process and identify theimpact that the BRRD will have on their own financial systems.
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