Public interest assessment

The Public Interest Assessment is one of the key policies underpinning the work of the SRB. It examines whether the resolution of a particular bank that is failing or likely to fail would be necessary, for example to ensure one or more of the following objectives: maintaining financial stability, protecting covered depositors and safeguarding public funds by minimising reliance on extraordinary public financial support. If not, resolution actions would not be taken and national insolvency procedures would apply. 

The SRB published its approach to the Public Interest Assessment in 2019. It gives clarity to the factors the SRB takes into account when conducting a PIA, and explains how it applies the criteria as set out in EU law. The approach was developed by the SRB and national resolution authorities, in consultation with the ECB and the EBA, to ensure a common understanding across the Banking Union.

When the SRB considers whether to plan for or to take resolution action – both at the resolution planning stage and after a failing or likely to fail (FOLTF) declaration – it performs a PIA. The conclusion of the PIA drives the decision as to whether resolution is to be considered as the preferred option in resolution planning respectively a resolution decision taken and not normal insolvency proceedings pursued in case of a failing bank. The PIA ensures that, in the case of resolution action, it would achieve one or more of the resolution objectives better than would be the case with a national insolvency procedure. The resolutions objectives are, inter alia, avoiding significant adverse effects on financial stability, protecting depositors covered by Directive 2014/49/EU (on Deposit Guarantee Schemes) and safeguarding public funds by minimising reliance on extraordinary public financial support.

In May 2021, the SRB published a revised approach to the Public Interest Assessment policy (PIA) in resolution planning. The updated approach takes into account that a bank’s failure may take place not only under an idiosyncratic scenario, but also under broader financial instability or a system-wide event. This consideration strengthens the choice of the best resolution strategy in order to protect the European taxpayer and promote financial stability in the EU. Board Member and Director of Resolution Strategy and Policy Coordination at the SRB, Sebastiano Laviola has written a blog on system-wide event here and the addendum to the PIA can be found below.