The unified decision mechanism will make the decision procedures faster by 2028

The Single Resolution Board (SRB) has published the new strategy for the resolution function of the Banking Union.

The strategy, called “SRM Vision 2028”, will guide the performance of the Single Resolution Mechanism (of which the Bank of Portugal is an integral part) until 2028, and comes at a time of transition in the resolution function of the Banking Union.

The ECB and national resolution authorities, including the Bank of Portugal, now identify among their strategic priorities “strengthening the operation of these plans and preparing for the application of resolution measures.”

This comes after “a period in which the focus was on preparing initial versions of resolution plans and building loss absorption capacity on the part of credit institutions (through the establishment of so-called MREL requirements and their gradual compliance).”

The aim is that, if necessary, each resolution plan (in each bank) can be implemented effectively and in a short period of time, making the EU banking sector more prepared to face possible future shocks.

SRM Vision 2028 represents the transition to a new phase, in order to take into account the evolution of the external environment and associated risks, and sets new medium-term objectives for three strategic areas: core activity, governance and human resources. It includes nine strategic objectives and 20 action plans that will be implemented by the end of 2028.

“The Bank of Portugal has contributed very actively to the development of the strategy of the new Single Resolution Mechanism, designed to enable the Resolution Authorities to further strengthen their contribution so that Portugal and the European Union continue to have a stable banking system that is both strong and able to withstand possible shocks,” stressed Deputy Governor Luis Máximo Dos. Santos.

The Bank of Portugal has been actively involved in the design of the new strategy, in its various stages, and proposes to consult the strategic vision presented by the Central Bank of Portugal.

According to the banking supervisor’s statement, the new strategic vision for the unified resolution mechanism was prepared during the past 12 months, with the participation of the national resolution authorities and after several consultations with the parties concerned.

“I welcome the cooperation with our colleagues at the Banco de Portugal and, in fact, all the national resolution authorities of the Banking Union, as well as the European Central Bank, the European Commission and the sector. Your contributions will help us increase efficiency, simplification and transparency, as well as find new ways to for work.

The goal of this new strategy is to better equip the risk management mechanism to deal with various challenges, to ensure that the banking problem can be solved in a way that protects financial stability at no cost to taxpayers.