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How the Single Resolution Mechanism works

Infographics - How the Single Resolution Mechanism works

Resolving failing banks

The European Central Bank (ECB), after consulting the Single Resolution Board (SRB), identifies if a bank is failing or likely to fail.

The case is brought to an SRB executive session.

Finding a solution

The SRB executive session adopts a decision:           

  • Is a private sector solution possible?
  • If not, is a resolution in the public interest?
  • If a resolution is not in the public interest, the bank will be wound up
  • If a resolution is in the public interest, the SRB moves to a resolution scheme

When adopting a resolution scheme, the SRB:         

  • identifies which resolution tools to use
  • decides whether and how much of the single resolution fund (SRF) can be used
  • places the bank under resolution

Approving the resolution scheme

EU institutions have maximum 24 hours to give their green light.

Option 1

  • The European Commission endorses the scheme
  • The resolution scheme enters into force

Option 2

  • The Commission raises objections to discretionary elements of the scheme
  • The SRB has eight hours to change and approve the scheme
  • The resolution scheme enters into force

Option 3

  • The Commission raises objections to the use of the SRF or the decision on public interest (within 12 hours)
  • The case is referred to the Council of the European Union for a decision

The Council decides by simple majority and within 12 hours to:

  1. refuse the objection: the scheme enters into force
  2. adopt the objection to the use of the SRF: the SRB has eight hours to change and approve the scheme, then the scheme enters into force
  3. adopt the objection to the decision on public interest: the scheme is not approved and the bank is wound up
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Last review: 4 February 2025