ECON Draft Reports on Proposed BRRD II Directive and SRM II Regulation


On September 29, 2017, the European Parliament’s Economic and Monetary Affairs Committee (“ECON“) published two draft reports relating to the European Commission’s proposed revisions to the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD) and to the implementation in the EU of the Financial Stability Board’s total loss absorbing capacity (TLAC) standard (BRRD II):

  1. Draft report on the Commission’s proposal for a Regulation to amend the Single Resolution Mechanism (Regulation 806/2014) (proposed SRM II Regulation).
  2. Draft report on the Commission’s proposal for a Directive to amend the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD) (proposed BRRD II Directive).

Each of the draft reports contains a Parliament legislative resolution on the proposed Regulation and Directive (as applicable), which suggests amendments to the European Commission’s original legislative proposal. They also each contain an explanatory statement by the rapporteur Gunnar Hökmark.

Next, ECON will vote to finalize the draft reports before they are considered by the Parliament.

Alterations related to insolvency rankings are necessary to integrate the TLAC standard requirements into the BRRD. In June 2017, ECON published a draft report on the Commission’s proposed Directive amending the BRRD as regards the ranking of unsecured debt instruments in insolvency hierarchy (the proposed Insolvency Hierarchy Directive).

As part of a package of banking reforms, the Commission published the proposed Directive in November 2016. The EU institutions have agreed to fast-track this proposal. The Council of the EU agreed to its general approach on the proposed Directive in June 2017 and, at that time, stated that it hoped the Parliament would be able to start negotiating by the end of 2017.