The European Parliament has adopted reforms to the EU bank crisis management and deposit insurance framework to broaden the use of resolution for failing banks, strengthen depositor protection, and reduce reliance on taxpayer support by placing losses first on shareholders, creditors and industry-funded safety nets. Under the package covering the Bank Recovery and Resolution Directive, the Single Resolution Mechanism Regulation and the Deposit Guarantee Schemes Directive, deposit guarantee schemes (DGS) gain the highest priority in the creditor hierarchy, followed by retail depositors and micro-, small- and medium-sized enterprises, then small public authorities such as municipalities and regional governments, where none are professional investors. In addition to the standard EU protection of EUR 100,000 per depositor per bank, certain deposits linked to real estate transactions will be protected at levels ranging from EUR 500,000 to EUR 2,500,000 depending on circumstances. The resolution framework is expanded to include small and medium-sized banks where this is deemed to be in the public interest, and the rules maintain an 8% minimum loss absorption requirement (of total liabilities and own funds) before external funds can be accessed, with a “bridge the gap” mechanism allowing DGS funds to help meet that threshold when a deposit-funded bank lacks sufficient loss-absorbing capacity. Member states may also allow DGS funds to be used for preventive or alternative measures to avert failure or to ensure access to deposits in insolvency. The rules enter into force on the twentieth day following publication in the Official Journal of the European Union and will apply, with some exceptions, from 24 months after entry into force.
European Parliament 2026-03-26
European Parliament adopts EU bank crisis management reforms expanding resolution to more banks and strengthening deposit guarantee protections
The European Parliament reformed the EU bank crisis management and deposit insurance framework to enhance depositor protection and reduce taxpayer reliance by prioritizing losses on shareholders, creditors, and industry-funded safety nets. The reforms elevate deposit guarantee schemes in the creditor hierarchy and extend protection to certain real estate-linked deposits. The resolution framework now includes small and medium-sized banks, maintaining an 8% minimum loss absorption requirement before accessing external funds.