The Crisis Management and Deposit Insurance (CMDI) framework needs repair. Some elements may be hailed as essential (deposit insurance, transfers, creditor hierarchy). However, the reform of the ‘twilight zone’ framework, including early intervention measures (EIMs), resolution preparation and triggers, is obviously needed and its substance is hard to object to. This paper explains why, and how to go about it. EIMs overlap with supervisory measures, or are mired in legal uncertainty, and are therefore not used. Preparation for resolution is not openly acknowledged by the law. Resolution triggers make the system rigid and slow. Lack of coordination can leave entities in legal limbo. ‘Twilight’ measures sit badly with market abuse. The Commission’s CMDI reform proposal addresses most of these flaws. It eliminates overlaps and enhances consistency between EIMs and supervisory measures, acknowledges the need to prepare for resolution, and allows the triggering of resolution through a sensible combination of framed discretion, cooperation between supervisors and resolution authorities, and a Public Interest Assessment (PIA) that compares resolution and insolvency-based liquidation more fairly. These amendments do not sufficiently acknowledge the relevance of market forces and do not suffice for a functioning Banking Union, but they are certainly necessary for other reforms to yield their benefits.

The Single Resolution Mechanism (SRM), which has been in operation since 2016, is particularly complex. It is headed by a ‘specific’ agency, the Single Resolution Board (SRB), but national authorities as well as national legal frameworks continue to play a decisive role in its operation. The Meroni doctrine also sets limitations on the extent to which (discretionary) powers may be delegated to the SRB. For this reason, very complex mechanisms had to be devised to guarantee that the European Commission and the Council would be sufficiently involved. Also, the SRM only applies to Banking Union Member States (i.e., euro area Member States and states in close cooperation). The co-existence of the Internal Market/EU27 on the one hand and the Banking Union on the other is a further source of complexity, as is the fact that the SRM partially relies on international law (the Single Resolution Fund and perhaps the European Stability Mechanism in the future). In short, the complexities within the SRM are many, and this article sheds light on them by considering complexities of a procedural, institutional and legal nature. It concludes by demonstrating that complexity has increased over time, yet it is probably unavoidable at this stage of European integration. However, efforts could still be made to simplify the applicable legal framework.

The State aid regime has dominated crisis management in the EU financial sector ever since the Global Financial Crisis. Even with the BRRD/SRM resolution framework taking effect, most European banks in distress continue to receive public financial support subject only to the State aid regime. However, it is one of the declared aims of the CMDI reform proposals to (further) reduce the bank-sovereign nexus by making it easier for banks of all sizes to access industry-financed resolution and deposit insurance funds instead of obtaining financial support directly from State budgets. This paper explores how the CMDI framework and the State aid regime currently interact and how this would change pursuant to the CMDI reform proposals. It argues that these reform efforts will be unlikely to make much of a difference and that, following their implementation, failing institutions will continue to be channeled away from the BRRD/SRM resolution framework towards a State aid-based assessment and treatment.

On 19 March 2023, the Swiss authorities announced that UBS would acquire its failing competitor Credit Suisse in a state-facilitated merger to avoid its resolution. What is seen by some observers as a blunt violation of international standards warrants an objective and balanced assessment. This article provides such an assessment, contrasting the measures taken on 19 March 2023 with alternative courses of action contemplated by the Swiss authorities and evaluating their outcome in light of the international framework devised for resolving global systemically important banks—the Key Attributes of the Financial Stability Board. The assessment shows that the handling of Credit Suisse’s failure was far from a bailout like those seen during the global financial crisis of 2007-2008. While the Swiss authorities chose not to apply their legal powers to put Credit Suisse into resolution, many aspects of the resolution framework fulfilled their intended purpose. Nevertheless, the article points to three key lessons for the further development of global resolution frameworks: (1) avoiding the risks associated with creating yet bigger banks should become an explicit objective of resolution planning; (2) preserving strategic optionality in resolution planning will significantly enhance the chances of successfully deploying resolution actions; and (3) resolution planning as well as a credible public sector backstop must cater for the ample funding needs during and after the resolution of global systemically important banks.

The adoption of bail-in by the EU and other jurisdictions as the core tool of their bank resolution regimes promised to ensure the effective financial restructuring of failed banks with the resources of their own stakeholders, thereby achieving the financial stability objectives of resolution while making taxpayer-funded bailouts a thing of the past. In retrospect, despite its many positive effects, it is questionable whether bail-in has fully lived up to its promise. The operationalisation of the bail-in tool is still ongoing, with several legal and practical issues yet to be fully resolved. Furthermore, the tool’s actual use in resolution actions has so far been sporadic and uneven, undermining its credibility; in any event, significant doubts remain as to the appropriateness of bail-in in situations of system-wide distress.

Resolution of a troubled institution and the allocation of losses among creditors can be an efficient way to avoid contagion and minimize taxpayer support, but raises major issues of fairness and equity towards shareholders and creditors, which are a source of tensions. The Banco Popular litigation saga offers clear empirical evidence of these tensions. This essay discusses the main lessons that can be drawn from that litigation.

Abstract This paper investigates the phenomenon of lowballing within the context of the EU Takeover Bid Directive (TBD), where offerors set bid prices typically below the current market price. It delves into the key features of the TBD’s mandatory bid regime and examines the varied implementation approaches by Member States, including ‘gold-plating’ practices. The analysis encompasses strategies employed in both mandatory and voluntary bids, with prominent cases such as Porsche/VW and ACS/Hochtief serving as illustrative examples. The paper critically assesses the implications of low-cost control transactions, the pressure exerted on shareholders to accept undervalued offers, and the circumvention of or maneuvering around the TBD’s mandatory bid rule. The impact of lowballing on the Directive’s objectives, particularly the protection of minority shareholders, is thoroughly evaluated. Additionally, the study reviews gold-plating remedies adopted by Member States, such as supplementary bid requirements and mandatory minimum acceptance thresholds, and assesses their effectiveness and legal viability. The paper concludes with a discussion on the adequacy of current regulations in safeguarding minority shareholders and mentions potential reforms to address the persistent issue of lowballing within the EU framework.