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SRB Chair, Elke König at the ECON Committee March 2022



Good evening Madam Chair and good evening honourable members,

It is a pleasure to be with you once again at the ECON Committee, and it is also wonderful to be here in person. Thank you for the opportunity to update you on the work of the SRB in promoting financial stability right across the Banking Union.  

If I may, Madam Chair, I want to first set our priorities at the SRB against the overall backdrop. Just 3 months ago, when I last addressed this committee, the backdrop to our work at the SRB was the pandemic and the economic impact of Covid-19.

However since then, the war in Ukraine and the unfolding tragedy there, is now not only the backdrop to our work at the SRB, but in some respects, it is centre-stage, not least because of the recent Sberbank case.

I’ll talk about that case in my speech this evening, before saying a few words on completing the Banking Union and our work on the resolvability assessment.

[Recent resolution activity]

Earlier this month we had to intervene with regard to Sberbank Europe AG. It is a good example of putting policy into practice at short notice. This crisis in this case unfolded with great speed because of the current political situation and resulting sanctions.

With regard to Sberbank we had decisions to make in three countries – Croatia, Slovenia and Austria. First, a 48 hours moratorium was deemed necessary for the group. In Croatia and Slovenia, we deemed resolution appropriate and, within the moratorium period, buyers for the two subsidiaries in these countries could be found in an open sales process. In these two countries, operations continued on as normal, with no impact on customers or on financial stability.

Turning to Austria, we decided that no resolution action was required for the Austrian parent company, because it was not in the public interest to put it into the European resolution procedure, and therefore it is now being wound up at national level in Austria. In other words, the bank is being dealt with under normal insolvency procedures and depositors are protected under the national DGS.

We were able to manage the crisis, thanks to the structures in place. The SRB is an independent agency of the European Union, but we worked hand in glove with many partners at national, EU and international level and I am thankful for the excellent cooperation we received at all these levels. We can call these three decisions a success for banking resolution and financial stability in Europe.

[A success, but room for improvement]

The three decisions taken have one thing in common – protection. The decisions protect financial stability; and the decisions protect depositors up to an amount of at least 100,000 euro in Austria and with no limits in both Slovenia and Croatia. We acted to protect the public interest and ensure financial stability. All of this has been done without having to use public funds, so not only are Sberbank’s customers protected, the taxpayer is too.

If the proof of the pudding is in the eating, then the case of Sberbank is further proof that the EU resolution framework works.

However, we were – again – faced with a couple of problematic points. In this group, 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. This is why I have long been calling for a harmonisation of the framework for insolvency of financial institutions. This case should serve as reminder of the need to get on with the job of harmonisation, not least to allow handling the failure of a bank in a consistent manner within the Banking Union or better still, the EU.

The second point I would highlight is the need for EDIS. Customers of these banks needed to be assured that their savings or deposits, are protected up to 100,000 euro, so long as the national or regional-backed DGS can pay out. It would be much better to have a European scheme to provide reassurance to depositors. It is important we can communicate with confidence in a time of crisis. At present, the set-up is not yet optimal. So, we saw quite some tension building up in at least one member state as citizens were questioning the safety of their deposits also in other banks. We have to be able to instil confidence at a time of crisis, and a proper EDIS would help to do this.

Let’s be honest; deposits are only protected insofar as the DGS can pay out.   A European layer of protection is required. 

I repeat my words of last December: the time for talking is over – we lack EDIS and we need to treat all depositors equally at least throughout the Banking Union.

[Resolvability assessment]

A more transparent assessment of resolvability has long been a key priority for the SRB. That’s why we have defined a heat-map on assessing resolvability, designed as a tool to monitor, benchmark and communicate on banks’ progress towards full resolvability. The heat-map illustrates the results of the combined assessment of the level of impact of each resolvability profile on the overall resolvability and the progress made by banks according to the Expectations for Banks document published by the SRB in April 2020. 

We are currently evaluating the first horizontal assessment. Achieving an overall consistent and also realistic assessment and heat-map is not an easy task, but it is a very valuable exercise – and we are clear to banks lagging behind: they must get their house in order. We stay committed to publishing an aggregated heat-map once the results are of a sufficient quality soon, and then start a yearly reporting cycle.

In a nutshell, preliminary results of the assessment performed last year show that:

  • banks have made most progress on the capabilities that were phased-in in previous years, in line with the timeline indicated in the Expectations for Banks.
  • G-SIIs are more advanced on resolvability profiles such as Governance, Loss Absorption Capacity, FMI contingency planning and communication planning, consistently with the international standards on these resolvability conditions.
  • The other banks are less advanced on governance and loss absorbing capacity, while they appear broadly aligned in the other profiles.
  • Significant progress has instead to be made on the capabilities which are expected to be phased-in during the current or next resolution planning cycle (e.g. liquidity in resolution, adequacy of management information system for resolution, separability of assets and liabilities under a transfer tool and restructuring after bail-in tool). 

We remain committed bringing all banks to the same resolvability-footing by end-2023 and publishing an aggregated heat-map once we have completed the assessments in course of this summer. You will therefore receive more updates from us during our next meetings.

[Policy work]

This year will focus on fine-tuning the policies we already have, rather than implementing major changes, as we lead into 2023 – the target year for steady-state resolvability. It is most likely that we will also open these policies once more for consultation with the industry to further enhance transparency and tailor our implementation guidance to industry needs.

In terms of priorities for resolution planning, topics for this year include

  1. the continued built up of adequate MREL capacity,

(ii) banks’ capabilities in managing liquidity and funding in resolution,

(iii) the topic of separability and business reorganisation plans and

(iv) a prioritisation of the work on management information systems. Banks have received individual working priorities for the imminent 2022 resolution planning cycle and effective implementation will be a joint effort of banks and IRTs.


Whatever lies ahead of us, we owe it to ourselves and to the people right throughout the European Union to continue our work to ensure financial stability, but we need your help, too. I invite each of you, to continue to use your influence and your political weight to ensure we put in place the final pillar of the Banking Union and enhance the European crisis management system.

We have a challenging period ahead of us; but, in reference to the lyrics of Salvatore Cutugno, let us “unite, unite Europe”. Let us unite and complete the Banking Union, and be “Insieme: 2022”. [1]

Thank you.


[1] "Insieme: 1992" (English translation: "Together: 1992") was the winning song of the Eurovision Song Contest 1990, in Zagreb, in what was then Yugoslavia, performed in Italian by Salvatore ‘Toto’ Cutugno for Italy. Cutugno sang about bringing the disparate nations of Europe together. The "1992" of the title refers to the year in which the European Union was scheduled to begin operation.

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