Journal of Financial Regulation, 2016, 2, 154–161 doi: 10.1093/jfr/fjw005 Advance Access Publication Date: 12 March 2016 Panorama The Implementation of the BRRD in Italy and its First Test: Policy Implications Lorenzo Stanghellini*
ABSTRACT Eleven months after the deadline, in November 2015, Italy implemented the Bank Recovery and Resolution Directive. The detailed structure of the Directive drove most of the choices, but the Italian implementing acts are overall clearer than the Directive, especially in outlining the sequence of decisions that the competent authorities and Downloaded from the resolution authorities have to take with respect to a bank that is failing or likely to fail. Less than a week after their enactment, the new rules were applied to resolve four regional banks that until then had been under temporary administration. Although the resolution has been carried swiftly and in accordance with the principles of the
Directive, this apparently minor case shows two lessons: that almost all banking crises http://jfr.oxfordjournals.org/ will be handled with the new rules, liquidation being confined to micro-banks, and that the practical challenges of resolution actions are enormous. KEYWORDS: banks; BRRD; Italy; resolution; bail-in; recovery
BACKGROUND Several Member States have hesitated to implement the Bank Recovery and Resolution Directive (2014/59/EU, hereinafter ‘the Directive’) within the short deadline imposed by article 130 of the Directive: 31 December 2014. Italy was by guest on April 24, 2016 among those, and finally transposed the Directive into law in November 2015. The Directive is extremely long, and its text is very detailed and hard to read. Moreover, it follows a sequence (preparation, early intervention, resolution) that ap- pears logical, but that in reality mixes up instruments of supervision, instruments of resolution and instruments of quasi-resolution. For instance, recovery plans and reso- lution plans fall under the ‘preparation’ heading (Title II), but they are two entirely different instruments, and the latter must be read in connection with the resolution tools (Title IV). The write down and conversion of capital instruments tool falls un- der the ‘resolution’ heading, but it may be exercised independently of a resolution action, and in such case it does not seem to require ‘public interest’ as detailed in the Directive (see article 59; see also the following paragraph 4).
* Lorenzo Stanghellini, Professor of Commercial Law, Department of Legal Sciences, University of Florence. The author wishes to thank Iacopo Donati, Carlo Lanfranchi, Monica Marcucci and Andrea Zorzi for useful comments. The usual disclaimers apply.
VC The Author 2016. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: [email protected]