Legislation

The Bank Recovery and Resolution Directive (BRRD) is an EU framework which governs the resolution of both institutions and in-scope investment firms. This directive laid the foundation for the second pillar of Banking Union. Banking Union harmonises the supervision, resolution and deposit guarantee schemes for all participating Member States.

The first pillar of Banking Union is the Single Supervisory Mechanism (SSM) which is undertaken by the ECB. The ECB fully assumed supervisory responsibility for banks in participating Member States on 4 November 2014.

The second pillar of Banking Union is the Single Resolution Mechanism (SRM) which is undertaken by the Single Resolution Board (SRB). The SRB is established by the SRM regulation, and is a fully independent EU agency acting as the central resolution authority within the banking union. Together with the national resolution authorities of participating countries, it forms the SRM.

The third pillar of Banking Union is the European deposit insurance scheme (EDIS).

The European Union (Bank Recovery and Resolution) Regulations 2015 (S.I. No 289 of 2015), which came into effect on 15 July 2015 (with the exception of the bail-in tool which came into effect on 1 January 2016), and transposed the BRRD into Irish law.

The Central Bank and Credit Institutions (Resolution) Act 2011 (CBCIR) is national legislation enacted in 2011 to govern the resolution of banks and credit unions, but due to the introduction of the BRRD in 2015 the CBCIR now only governs the resolution of credit unions.

The Resolution Division makes use of this legislation to ensure that the resolution of institutions, in-scope investment firms and credit unions are dealt with in a timely, transparent and effective manner to safeguard against exchequer funds being used in resolution cases.