Organization of the bank resolution fund

The BRR Directive requires each Member State to set up one or more national resolution financing arrangements, whose resources have to be provided by the financial sector, in order to prevent the use of funds from the national budgets. In order to apply this requirement, under the provisions of the Law no. 312/2015, the bank resolution fund has been established in Romania, whose resources are administered by the Bank Deposit Guarantee Fund (FGDB).

The use of the bank resolution fund resources

The use of the resources of the bank resolution fund is decided by the National Bank of Romania, as the resolution authority, to cover the needs related to the effective application of the resolution tools, for the following purposes:

1. to guarantee the assets or the liabilities of the institution under resolution, its subsidiaries, a bridge institution or an asset management vehicle;
2. to make loans to the institution under resolution, its subsidiaries, a bridge institution or an asset management vehicle;
3. to purchase assets of the institution under resolution;
4. to make the necessary contributions to a bridge institution or an asset management vehicle;
5. to pay compensation to shareholders or creditors when they sustain greater losses under resolution than they would have incurred in a winding up under normal insolvency proceedings;
6. to make a contribution to the institution under resolution in lieu of the write down or conversion of liabilities of certain creditors, when the bail-in tool is applied and the resolution authority decides to exclude certain creditors from the scope of the bail-in;
7. to lend to other financing arrangements on a voluntary basis in accordance with the law;
8. to repay loans and associated costs;
9. to take any combination of the actions referred to under (a) to (h).

The bank resolution fund resources may be used to take the actions referred to in the previous paragraph and with respect to a potential purchaser in the context of the sale of business tool.

Contributions to the bank resolution fund

The initial resources of the bank resolution fund were obtained by taking over the resources of the former Restructuring Fund for Credit Institutions (that was administered by the FGDB). Also, the bank resolution fund pools together regular (annual) contributions from credit institutions, whose level is set by the National Bank of Romania so that the target level of 1% of the amount of covered deposits of all institutions authorised in Romania might be reached by 31 December 2024. If the available financial means of the bank resolution fund are not sufficient to cover the losses, costs or other expenses incurred by its use, each credit institution shall pay an extraordinary ex-post contribution, set by the National Bank of Romania. The level of the regular and extraordinary contributions to the bank resolution fund is set by the National Bank of Romania, as the resolution authority, in accordance with the provisions of the Law no. 312/2015 and of the Commission Delegated Regulation (EU) 2015/63 of 21 October 2014, as subsequently amended and supplemented. Furthermore, the FGDB is entitled to contract borrowings or other forms of support from credit institutions, financial institutions or other third parties in the event that the amounts raised by the bank resolution fund are not sufficient and the extraordinary contributions are not immediately accessible or sufficient.