Changes from report parliamentary committee draft to report parliamentary committee draft

AddedSHORT JUSTIFICATION

RemovedRecital 3 a (new): (3a) One of the key objectives of this Directive is to introduce an updated approach and a set of tools to empower authorities to handle effectively the potential failure of some banks or a group of banks. That approach should promote transparency and predictability, while minimising adverse economic consequences. Such an approach is aligned with the overarching bail-in principle of Directive 2014/59/EU, while also maintaining the practical feasibility of dealing with the failure of medium-sized banks.

AddedThe Council position at first reading reflects the agreement reached between Parliament and the Council in interinstitutional negotiations at early second reading stage, after legal-linguistic verification. Since the Committee on Economic and Monetary Affairs (ECON), in its vote on 5 November 2025, already confirmed the outcome of those interinstitutional negotiations, as your rapporteur, I propose that ECON recommends that the Plenary confirms the position of the Council at first reading without amending it.

RemovedRecital 9: (9) The resolution framework is meant to be applied to potentially any institution or entity, irrespective of its size and business model, if the tools available under national law are not adequate to manage its failure. To ensure such outcome, the criteria to apply the public interest assessment to a failing institution or entity should be specified. In particular, it is necessary to clarify that, depending on the specific circumstances, certain functions of the institution or entity can be considered critical even if their discontinuance would impact financial stability or critical services only at regional level on a significant scale.

RemovedRecital 10 a (new): (10a) Where national insolvency and resolution frameworks achieve effectively the objectives of the framework in a comparable manner, preference should be given to the option that minimises the risk for taxpayers and the economy. That approach ensures a prudent and responsible course of action, aligned with the overarching goal of safeguarding both the interests of taxpayers and the broader economic stability.

RemovedRecital 11: (11) The assessment of whether the resolution of an institution or entity is in the public interest should also reflect, to the extent possible, the difference between, on the one hand, funding provided through industry-funded safety nets (resolution financing arrangements or DGSs) and, on the other hand, funding provided by Member States from taxpayers’ money. Funding provided by Member States bears a higher risk of moral hazard and a lower incentive for market discipline. As the public interest assessment is an ad hoc decision, it also lacks transparency and has negative consequences for the level playing field in the internal market. Therefore, when assessing the objective of minimising reliance on extraordinary public financial support, resolution authorities should find funding through the resolution financing arrangements or the DGS preferable and funding through an equal amount of resources from the budget of Member States should be considered only under extraordinary circumstances.

RemovedRecital 11 a (new): (11a) Extraordinary financial support to financial institutions should be granted, if at all, only in extraordinary circumstances of a systemic nature or pertaining to very large economic turmoil, as it imposes a significant burden on public finances and disrupts the level playing field in the internal market.

RemovedRecital 12: (12) To ensure that the resolution objectives are attained in the most effective way, the outcome of the public interest assessment should be negative only where the winding up of the failing institution or entity under normal insolvency proceedings would achieve the resolution objectives more effectively or reducing overall risks for the economy.

RemovedRecital 12 a (new): (12a) In deciding between resolution and liquidation, the option with the lower overall costs should be preferred. That assessment should take into account various costs, including those related to DGS payouts, such as the duration required for asset recovery and the income lost during the process. In cases where the resolution and liquidation options both exhibit similar cost profiles, preference should be given to the option that carries fewer associated risks for the economy, encompassing public finances and the impact on the stability of the economy.

RemovedRecital 37 a (new): (37a) The modification in the ranking of creditors and the removal of the DGS super preference not only enhances the accessibility of DGSs and the single resolution fund (SRF) rather than the use of public support, but also paves the way for more financially effective solutions in the resolution of financial institutions. That should in turn reduce costs for taxpayers and promote an efficient use of the different tools existing in the Union financial ecosystem.

RemovedRecital 38: (38) The ranking of all deposits should be fully harmonised through the implementation of a general depositor preference with a two-tiered approach, whereby most deposits benefit from a higher priority ranking over ordinary unsecured claims. At the same time, the use of the deposit guarantee schemes in resolution, insolvency and in preventive measures should always remain subject to compliance with the relevant conditionality, in particular the so-called ‘least cost test’.

RemovedRecital 39: deleted

RemovedRecital 39 a (new): (39a) The ranking of deposits should be done in recognition of the diversity of deposit types and sizes, and in particular recognise the importance of deposits used for transactions. This Directive introduces a two-tier priority ranking system for claims, reflecting both the economic arguments and the preconditions needed to allow DGS-supported resolution to take place in some cases.

RemovedRecital 40: deleted

RemovedRecital 40 a (new): (40a) The two-tier priority system, as reflected in the amendments in this Directive to Article 108 of Directive 2014/59/EU, ensures that deposits excluded from coverage under Directive 2014/49/EU, as well as certain deposits of legal entities exceeding a defined, 12-month maturity period, enjoy a higher priority ranking compared to ordinary unsecured creditors, but one that is lower than deposits not excluded from Directive 2014/49/EU, deposits of SMEs and legal entities with a maturity of less than 12 months, as well as claims by the DGS subrogating for covered deposits. That tiered approach is designed to provide enhanced protection for a wide range of depositors, reflecting the unique characteristics of their deposits, while opening up the possibility of resolution to entities not covered by the current framework.

RemovedRecital 44: (44) The contribution of the DGS in resolution should be subject to certain limits. First, it should be ensured that any loss which the DGS may bear as a result of an intervention in resolution does not exceed the loss that the DGS would bear in insolvency if it paid out covered depositors and subrogated to their claims over the institution’s assets. That amount should be determined on the basis of the least cost test, in accordance with the criteria and methodology set out in Directive 2014/49/EU, taking into account all relevant factors, including the time value of money as well as delays in the recovery of funds in insolvency proceedings. Those criteria and methodology should also be used when determining the treatment that the DGS would have received had the institution entered normal insolvency proceedings when carrying out the ex-post valuation for the purposes of assessing compliance with the ‘no creditor worse off’ principle and determining any compensation owed to the DGS. Second, the amount of the DGS’s contribution aimed at covering the difference between the assets and liabilities to be transferred to a purchaser or to a bridge institution should not exceed the difference between the transferred assets and the transferred deposits and liabilities with the same or a higher priority ranking in insolvency than those deposits. That would ensure that the contribution of the DGS is only used for the purposes of avoiding the imposition of losses on depositors, where appr…

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 1 – point b, Article 2 – paragraph 1 – point 35: (35) ‘critical functions’ means activities, services or operations the discontinuance of which is likely in one or more Member States to lead to the disruption of services that are essential to the real economy or to disrupt financial stability at national level, or regional level on a significant scale, due to the size, market share, external and internal interconnectedness, complexity or cross-border activities of an institution or group, with particular regard to the substitutability of those activities, services or operations;

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 2, Article 5 – paragraph 2 – subparagraph 2: In the absence of changes referred to in the first subparagraph in 12 months following the latest annual update of the recovery plan, the competent authorities may exceptionally waive, until the subsequent 12-month period, the obligation to update the recovery plan. Such a waiver shall not be granted for more than two consecutive 12-month periods.

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 15, Article 30a – paragraph 2 – subparagraph 1 – introductory part: Competent authorities shall notify resolution authorities as early as possible where they consider that there is a material risk that one or more of the circumstances in Article 32(4) would apply in relation to an institution or an entity referred to in Article 1(1), points (b), (c) or (d), including after exploring measures that would prevent the failure of the institution or entity. That notification shall contain:

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 15, Article 30a – paragraph 2 – subparagraph 2: After having received the notification referred to in the first subparagraph, resolution authorities shall assess, in close cooperation with competent authorities, what constitutes a reasonable timeframe for the purposes of the assessment of the condition referred to in Article 32(1), point (b), taking into account the speed of the deterioration of the conditions of the institution or entity referred to in Article 1(1), points (b), (c) or (d), the risk that a prolonged process increases the overall costs for customers and the economy, the need to implement effectively the resolution strategy and any other relevant considerations. Resolution authorities shall communicate that assessment to competent authorities as early as possible.

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 16, Article 31 – paragraph 2 – point d: (d) to protect depositors and to protect investors covered by Directive 97/9/EC;

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 17 – point a, Article 32 – paragraph 1 – point b: (b) having regard to the timing, the need to implement effectively the resolution strategy and other relevant circumstances, there is no reasonable prospect that any alternative private sector measure including measures by an IPS, supervisory action, early intervention measures, or write down or conversion of relevant capital instruments and eligible liabilities as referred to in Article 59(2) taken in respect of the institution would prevent the institution from failing or being likely to fail within a reasonable timeframe;

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 17 – point c, Article 32 – paragraph 5 – subparagraph 1: For the purposes of paragraph 1, point (c), a resolution action shall be treated as in the public interest where that resolution action is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives referred to in Article 31 and where winding up of the institution under normal insolvency proceedings would not meet those resolution objectives more effectively. Where national insolvency and resolution frameworks achieve the framework objectives in a similar manner, the option that minimises the risk for taxpayers shall be favoured.

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 17 – point c, Article 32 – paragraph 5 – subparagraph 2 a (new): Notwithstanding the outcome of the assessment under the first subparagraph of this paragraph, a resolution action shall always be treated as being in the public interest where the resolution objective set out in Article 31(2), point (c), might be at risk.’

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 17 – point c a(new), Article 32 – paragraph 5 a (new): (ca) The following paragraph is inserted: / “5a. EBA shall contribute to monitoring and promoting the effective and consistent application of the public interest assessment referred to in paragraph 5. / By ... [three years after the date of entry into force of this amending Directive], EBA shall provide a report on the scope and application of paragraph 5 across the Union. That report shall be shared with the Commission in order to assess the effectiveness of the measures outlined in paragraph 5 and their impact on the level playing field. / Based on the outcomes of the review, proposals or guidelines may be developed with the aim of enhancing market efficiency and levelling the playing field among Member States.”

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 19, Article 32c – paragraph 1 – point a – introductory part: (a) where, to remedy a very large scale disturbance in the economy of a Member State or to preserve financial stability where that is negatively affected by systemic events of a large scale, the extraordinary public financial support takes any of the following forms:

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 19, Article 32c – paragraph 1 – point d: (d) where the extraordinary public financial support in response to a large-scale systemic threat to financial stability, whether ongoing or potential, takes the form of State aid within the meaning of Article 107(1) TFEU granted in the context of the winding up of the institution or entity pursuant to Article 32b of this Directive, other than the support granted by a deposit guarantee scheme pursuant to Article 11(5) of Directive 2014/49/EU.

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 55 – point a, Article 108 – paragraph 1 – introductory part: 1. Member States shall ensure that in their national laws governing normal insolvency proceedings:

RemovedAn integral part of a newly proposed system for handling failing banks is a modification of an existing super preference of Deposit Guarantee Scheme (DGS) claims. Without this change, the DGS would be used predominantly in its traditional 'pay off' role and the proposed mechanism would likely go unused. Striking a balance in the change in the hierarchy of claims within the new framework should make sure some parts of uncovered deposits are treated pari passu with DGS claims. This adjustment is fundamental to the feasibility and effectiveness of the proposal, ensuring that it aligns with the objectives of financial stability, protection of taxpayers money, fair burden sharing and responsible governance.

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 55 – point a, Article 108 – paragraph 1 – point a: (a) the following have the same priority ranking, which is higher than the ranking provided for the claims of ordinary unsecured creditors:

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 55 – point a, Article 108 – point a – points i and ii: (i) deposits that are excluded from coverage under Article 5 of Directive 2014/49/EU; and / (ii) deposits of legal entities that are not micro, small and medium-sized enterprises, the maturity of which exceeds 12 months;

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 55 – point a, Article 108 – paragraph 1 – point b: (b) deposits other than those referred to in point (a), and deposit guarantee schemes subrogating to the rights and obligations of covered depositors in insolvency, have the same priority ranking which is higher than the ranking provided for under point (a).

RemovedDirective 2014/59/EU

RemovedArticle 1 – paragraph 1 – point 55 – point a, Article 108 – paragraph 1– point c: deleted