Contact Committee report on the “Preparation for resolution of medium-sized and small banks in the euro area”


Today, the EU Contact Committee has published a report on the “Preparation for resolution of medium-sized and small banks in the euro area”. The Task Force on Banking Union developed the report. The report is based on the findings of a parallel audit on banking resolution at national level. The SAIs of Austria, Estonia, Finland, Germany, the Netherlands, Portugal and Spain participated in the audit. The task force was co-chaired by the SAIs of Germany and the Netherlands. The report reflects the findings developed by the participating SAIs on banking resolution at their respective national level.

The task force found that preparation for resolution activities of medium-sized and small banks is under way. However, the process and substance of resolution planning for medium-sized and small banks differ among the countries. The key findings and recommendations of the parallel audit are set out below:-        Most of the data held by National Resolution Authorities (NRAs) on budget and staff does not distinguish between resolution activities for large banks on the one hand, and small and medium-sized banks on the other. Nor does the data provide information on the cost of their various other tasks. We recommend that NRAs document the resources, in terms of budget and staff, allocated to resolution planning. This exercise should be done separately for large, medium-sized and small banks, as well as and other tasks;

-        Since NRAs perceived a lack of specific guidance from the Single Resolution Board (SRB) for resolution planning related to medium-sized and small banks during the audit period, they developed their own internal guidance. This may lead to diverging approaches and practices in implementing resolution across the countries concerned, e.g. some topics are not equally or only to a limited extent addressed in resolution plans. The NRAs, together with the SRB, should therefore develop common resolution planning guidance for medium-sized and small banks in the euro area;

-        Due to conditions set by the SRB, internal SRB guidance for resolution planning related to medium sized and small banks could not be fully taken into account by SAIs.  

Against this backdrop, the Contact Committee calls on all actors in charge at European and national level to strengthen the independent external audit of banking resolution, in particular by making sure that the SAIs have unlimited access to the information they deem relevant for their audit work.

The report is available in English on the Contact Committee’s website (links to the underlying national audits are included at the end of the report):

Please note that in January 2021, the ECA intends to publish a special audit report on the state of preparedness of the Single Resolution Mechanism. The ECA’s report is expected to cover the Single Resolution Board's policy framework, the preparation of resolution plans for large, medium and small banks as well as the organisational set-up of the SRM

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