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Closing remarks by SRB Chair, Elke König at the SRB and ECB Joint Conference "The test of time: banking union a decade on"


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Good morning,

So, it falls to me to close this event.

First of all, I want to thank all of our participants - those who spoke, those who asked questions, those who listened, and of course, our media representatives - who have reported on the discussions taking place here over the past few days. 

As I mentioned yesterday, good progress was made in the area of crisis management at last week’s Eurogroup. It is true, that progress was not made on all of the areas I would have liked. EDIS will clearly have to take a backseat, for now at least.

However, to borrow a political phrase, “we are where we are”. No matter the outcome of last week’s meeting, I am quietly confident that our politicians will still be able to make good progress in order to promote financial stability in Europe and beyond. In particular, Paschal Donohoe, President of the Eurogroup, has done much to advance the cause of financial stability, since he took up the role just two years ago.

First this morning, I will recall a number improvements the SRB would like to see in the framework, while making reference to the experience in our most recent resolution case, before then briefly looking at challenges ahead.

[Improving the crisis management framework]

To improving the crisis management framework first. The case of Sberbank showed that the resolution framework in Europe works. The communication and cooperation between institutions across the EU was exemplary, and I want to thank once again all of those involved. However, the case also showed us that there is room for improvement. I have long called for improvements in our existing framework, and I am pleased with the progress that the Commission is making on the crisis management framework and I await keenly the exact proposals that will be on the table. 

Now, turning in detail to the Eurogroup outcome last week, I support expanding the scope of resolution. This expansion should be accompanied by an enhanced set of funding options for the resolution authority, to ensure that we have all the tools necessary for the resolution of those small and medium-sized banks that will come under the scope of resolution.

We also welcome the plans to strengthen national DGSs. If we are to avoid a run on banks in a time of crisis, then depositors must feel secure. Europeans, who work hard for their money, must always be reassured that their deposits and savings in banks are safe. It is therefore important to reinforce the deposit guarantee system across the Banking Union, to provide this reassurance to depositors. Without a strong, secure DGS, we risk seeing a run on banks – something I think all of us agree must be avoided. But this work has to go hand-in-hand with harmonisation to ensure that we have a consistent approach across the Banking Union.

Staying with the Eurogroup meeting, I am also pleased, that work will commence on harmonising insolvency procedures – to some extent at least. As Europe’s central resolution authority, we are often faced with challenges in applying some of the existing framework, because applying the rules in the same way across the Banking Union, can lead to very different outcomes, depending on the country concerned. In the case of Sberbank for example, we were dealing with different legal frameworks simultaneously, creating quite some challenges. It is important to highlight that this would be amplified for a larger banking group operating in say half a dozen or more Banking Union countries and beyond. This really shows the need for the harmonisation of the framework for insolvency of financial institutions. Harmonisation is really important if we are serious about being able to resolve large banks over just a few days, let alone have a sound NCWO assessment. This case served as a reminder of the need to get on with the job of harmonisation, not least to enable the consistent management of bank failures right across the EU.

If I may, I might just add two further points where there is potential for improving the crisis management framework.

The moratorium tool needs to be improved. It is a vital tool, but under the current set-up, timing is a real issue. If we are to allow every actor in the resolution process, the time they are legally entitled to, for examination of the various steps of the resolution scheme, we may run out of weekend before Monday and even the existing slightly less than two days of moratorium may not suffice to solve that problem. Adding the SRF and the backstop in a resolution case would mean even more time pressure, so really this is something that must be looked at.

My last point on areas for improvement is on the practical aspects of the implementation of the Single Point of Entry strategies, including identification of the legal and practical obstacles to the transferability of funds from the point of entry to the subsidiaries. We have to ensure that a bank operating across a number of countries with a Single Point of Entry resolution strategy, will really be resolved as a group and that there are appropriate arrangements that ensure the resolution entity will “take care” of a subsidiary located in a different jurisdiction in the event of a crisis. We saw in the Sberbank case how challenging managing the failure of a bank operating across jurisdictions can be, and that was only a relatively small bank in Europe.


Before I finish, a brief look at some challenges. We have seen just how long it has taken to develop the Banking Union. The test of time has shown that a decade on, we have still not managed to complete the Banking Union. So, far, we have succeeded in managing the bank failures that have been thrown at us.

But, ladies and gentlemen, the pace of change, the advance of digital technologies and fintech might not be so forgiving; and might not be compatible with the slow pace of legislative change we have come to know in the EU.

This, of course, will be for people other than me to deal with, but it is something of concern. There is much hard work on the road ahead, in order to get the balance right between allowing space for innovation in the banking sector, while also ensuring that we have proper, up to date regulatory measures in order to ensure we can deal with any hiccups.


I want to conclude.

We are all aware of the context in which we meet today, and so, in a time of division and uncertainty, it is essential that we come together, in the spirit of cooperation, in order to drive the financial stability agenda forward.

This, the first such joint ECB/SRB conference, is a good example of that cooperation, and I thank you all once again for your thoughts and ideas.

To all of those connected online, I say thank you. And to those who made it to Brussels, I thank you also, and wish you a safe trip home.

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