Expanding the Scope of the EU BRR Framework: An Administrative Receivership for the Banking Union

The global financial crisis of the early ‘00s prompted EU legislators to harmonize the regime for the management of bank crises and to establish a dedicated pillar within the scope of the European Banking Union to centrally manage credit institutions’ failures. Nonetheless, established policy approaches concerning the assessment of the “public interest” condition limit the effective use of resolution procedures to a minority of credit institutions able to meet the systemic importance threshold. In order to prevent the resulting renationalization of crisis management measures for the remaining banks, the scope of the EU BRR framework should be expanded through the establishment of a special bank administrative receivership (BAR) system managed by the SRB. The BAR should represent an alternative to the dichotomy between resolution and NIP, and it should leverage on the combined use of the Sale of Business and the Asset Separation tools, supplemented with DGSs’ bridge financing to realize a smooth transfer of quality assets to third party buyers. The regime should be open to failing credit institutions able to pass a new PIA test based not only on financial stability concerns, but also on an assessment of the value destruction associated with piecemeal liquidation.