Reorganisation and winding-up
of credit institutions in the EU
DR MAREK PORZYCKI
JAGIELLONIAN UNIVERSITY
General information
 Harmonisation by means of a directive –
implementation by national provisions necessary
 Directive 2001/24/EC of the European Parliament
and of the Council of 4 April 2001 on the
reorganisation and winding up of credit
institutions (attention to low quality of the official
Polish translation!)
 lex specialis in relation to the European Insolvency
Regulation (see exclusion in Article 1(2) of the
EIR)
Background
 Background – cross-border issues:
- activities of credit institutions in other (host)
Member States than the home Member State (on
the basis of a single authorisation granted by the
home Member State)  cross-border provision of
services, establishing branches
- branches of credit institutions from outside the EU
- credit institutions being subsidiaries of credit
institutions from other Member States
Purpose
 to guarantee the recognition and effectiveness of
reorganisation and winding-up measures on the
entire territory of the EU (including Denmark)
 some extent of harmonisation of those measures
(divergence of national insolvency laws however
persists)
 maintainig unity between a credit institution and
its branches in case of its difficulties ( no
secondary proceedings)
Scope of application
 credit institutions and their branches in other
Member States (as defined in Directive 2006/48/EC
relating to the taking up and pursuit of the business
of credit institutions (recast))
 branches of credit institutions having a head office
outside the EU, only if that institution has branches
in at least 2 Member States
 ‘reorganisation measures’ and ‘winding-up
proceedings’ as defined in Article 2 of Directive
2011/24/EC
Reorganisation measures
 Exclusive competence of the authorities of the home
Member State, extended to branches established in
other Member States (Article 3)  no secondary
proceedings
 Law of the home Member State is applicable (Article
3(2))
 Full effectiveness of reorganisation measures
throughout the whole EU (Article 3(2))
 Exchange of information between authorities of
Member States (Articles 4-5), publication rules (Article
6), informing creditors in other Member States (Article
7)
Winding-up proceedings
 Exclusive competence of the authorities of the home
Member State, extended to branches established in other
Member States (Article 9(1))  no secondary
proceedings
 Law of the home Member State is applicable (Article 10)
 Automatic recognition and full effectiveness of
reorganisation measures throughout the whole EU
(Article 9(1))
 Informing the authorities of host Member States (Article
9(2), publication rules (Article 13), informing creditors in
other Member States (Article 14)
Harmonisation of winding-up proceedings
 Duty to consult competent authorities before
voluntary winding-up (Article 11)
 Withdrawal of a credit institution’s authorisation in
case of winding-up following the failure or in lack of
reorganisation measures (Article 12)
Protection of local interests in other Member
States
 Informing creditors (Articles 14, 18)
 Protection of third parties honouring obligations for the
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benefit of credit institutions subject to winding-up (Article 15)
Law applicable to contracts for employment and in respect to
immovable property (Article 20)
Protection of third parties’ rights in rem (Article 21)
Provisions on netting (Article 25), transactions on regulated
markets (Article 27), repurchase transactions (Article 26)
Provision on pending lawsuit (Article 32)
Disposal of immovable assets or assets subject to registration
in a register, account or centralised deposit system (Article 31)
Envisaged reforms – a new EU framework
for bank recovery and resolution
 Preparation and prevention – recovery plans to be
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prepared by banks, resolution plans to be prepared
by authorities
Intra-group support agreements
Early supervisory intervention, including
appointment of a „special manager”
Resolution tools: sale of business, „bridge bank”,
asset separation („bad bank”), bail-in
(recapitalisation by conversion of debt into equity)
Enhanced cooperation between national authorities
and the European Banking Authority (EBA)
Additional reading
 Summary of legislation on the EU website
http://europa.eu/legislation_summaries/internal_market/
single_market_services/financial_services_banking/l2400
8_en.htm
 Information on envisaged regulatory reforms on the
Commission website
http://ec.europa.eu/internal_market/bank/crisis_manage
ment/index_en.htm
 B.J. Attinger, Crisis management and bank resolution: Quo
vadis, Europe?, ECB Legal Working Paper Series, no. 13,
December 2011,
http://www.ecb.int/pub/pdf/scplps/ecblwp13.pdf