The negotiators of the EU Council and the European Parliament representing the EU Member States have reached a political agreement on the reform of crisis management and deposit guarantee (CMDI) legislation for banks on 25 June 2025.
- In the future, more institutions will be prepared for implementing resolution measures. An assessment of how critical an institution’s operations are should focus on both national and regional levels. Thus, the threshold for considering resolution measures to be in the public interest is lowered.
- In the future, it will be possible to use more deposit guarantee funds funded by the banking sector in connection with resolution measures. The deposit guarantee fund’s “least cost principle” will be abolished as such. Current regulations limit the use of funds to cover the potential cost of bankruptcy proceedings. In the future, the use of funds will be limited by the amount of covered deposits held by the institution subject to resolution measures.
- Similarly, the use of funds from the banking sector-funded resolution fund will be facilitated in connection with the use of transfer instruments, such as the sale of business. The precondition for using the fund’s assets in the event of loss coverage and recapitalisation remains unchanged: the liability of owners and investors will be the same, at least 8% of the total liabilities, including own funds. However, when assessing the preconditions for using the resolution fund, the amount of deposit guarantee funds used to finance resolution can be taken into account under strict conditions when assessing whether the above-mentioned 8% condition is met.
- The preference for repayment of covered deposits and the deposit guarantee fund and the preference of households and SME depositors in relation to other deposits remains unchanged.
Before the EU Council and the European Parliament finally approve the legislation, the parties must finalise the legislative proposals based on the outcome that has now been reached in the technical negotiations.
Press release published by the Council of the EU
Further information:
Harri Hämäläinen and Hanna Westman (firstname.lastname(at)rahoitusvakausvirasto.fi)
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