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THE TRANSNATIONAL GOVERNANCE OF BANK RESOLUTION AND THE TREATMENT OF NATIONAL REGULATORY VARIATION IN THE EU

Published online by Cambridge University Press:  30 March 2021

Andromachi Georgosouli
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Abstract

The transnational governance of bank resolution must be well-designed to provide credible solutions to financial crisis management. While at policy level, there is a broad consensus on best practice, the implementation stage often leaves something to be desired. Focusing on the implementation of the relevant Financial Stability Board (FSB) recommendations in the EU, this article explores this issue and proposes certain reforms. It argues for closer EU control and scrutiny over national decision-making without, however advocating a “one-size-fits-all” approach. Its main insight is that the promotion of transnational convergence need not come at the expense of the distinctive attentiveness of EU law to local conditions nor indeed involve a massive shake-up of the existing EU architecture. Its aim is to contribute to scholarly and public policy debates in this field in anticipation of the EU response to the final conclusions of the post-implementation evaluation of the FSB recommendations, which is currently in progress.

Keywords

banking and financeEU lawtransnational governanceharmonisationEuropean Banking AuthoritySingle Resolution BoardBank Recovery and Resolution DirectiveSingle Resolution MechanismFinancial Stability Boardbank resolution
Type
Articles
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The Cambridge Law Journal , Volume 80 , Issue 1 , March 2021 , pp. 74 - 100
Copyright
Copyright © Cambridge Law Journal and Contributors 2021

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Footnotes

*

Senior Lecturer, Centre for Commercial Law Studies, QMUL, 67-69 Lincoln's Inn Fields, London WC2A 3JB.

An earlier version of this article was presented at the European Banking Institute Global Conference (22–24 February 2018, Goethe University, Frankfurt am Main). I would like to thank M. Bodellini, D. Gluch, M. Goldby, R. Lastra, A Miglionico, D. Stroppa, E. Voyiakis and the Journal's anonymous referees for their comments. Any errors remain my own.

References

1 Wilmarth, A.E., “Citigroup's Unfortunate History of Managerial and Regulatory Failures” (2014) 47(1) Ind.L.Rev. 69Google Scholar; Tomasic, R., “Establishing a UK Rescue Regime for Failed Investment Banks” (2010) 3(2) Corporate Rescue and Insolvency Journal 60, 61–62Google Scholar; Campbell, A. and Moffatt, P., “Dealing with Financially Distressed Banks: The New ‘Rescue’ Proposals” (2011) 26(1) Journal of International Banking and Financial Law 34, 34–35Google Scholar; MacNeil, I., “The Trajectory of Regulatory Reform in the UK in the Wake of the Financial Crisis” (2010) 11(4) European Business Organisation Law Review 483Google Scholar, 509.

2 The characterisation of a bank (or any other financial firm) as “systemic” implies that, if this bank were to fail, it would trigger a financial crisis and destabilise the real economy. For a comprehensive discussion of the nature of systemic risk, see Anabtawi, I. and Schwarcz, S., “Regulating Systemic Risk: Towards an Analytical Framework” (2011) 86 Notre Dame Law Review 1349Google Scholar. The problem of moral hazard is further discussed in Section III.

3 Financial Stability Board (FSB), “Key Attributes of Effective Resolution Regimes for Financial Institutions” (2014), available at http://www.fsb.org/wp-content/uploads/r_141015.pdf (last accessed 1 May 2020).

4 FSB, “Evaluation of the Effects of Too-Big-to-Fail Reforms: Consultation Report” (2020), available at https://www.fsb.org/wp-content/uploads/P280620-1.pdf (last accessed 30 November 2020), 8. The same point is also echoed in IMF, “Euro Area Policies: Financial Stability Assessment” (2018) IMF Country Report No 18/226, available at https://www.imf.org/en/Publications/CR/Issues/2018/07/19/Euro-Area-Policies-Financial-System-Stability-Assessment-46100 (last accessed 1 May 2020).

5 Article 100 of European Parliament and Council Directive 2013/36/EU (OJ 2013 L 176 p.338) (hereafter “Capital Requirements Directive IV”); F. Niepmann and V. Stebunovs, “How EU Banks Modelled Their Stress Away in the 2016 EBA Stress Tests” (30 July 2018), available at https://voxeu.org/article/how-eu-banks-modelled-their-stress-away-2016-stress-tests (last accessed 1 November 2020) focusing on EBA stress tests and industry gaming.

6 Niepmann and Stebunovs, “How EU Banks Modelled Their Stress Away”.

7 World Bank Group Financial Sector Advisory Centre, “Bank Resolution and ‘Bail In’ in the EU: Selected Case Studies pre and post BRRD” (12 December 2016; disclosure date 18 April 2017), available at http://documents.worldbank.org/curated/en/731351485375133455/pdf/112265-REVISED-PUBLIC-FinSAC-BRRD-CaseStudies.pdf (last accessed 1 May 2020); E. Ferran, “Understanding the New Institutional Architecture of EU Financial Markets Supervision” in E. Wymeersch, K. Hopt and G. Ferrarini (eds.), Financial Regulation and Supervision: A Post Crisis Analysis (Oxford 2012); N. Moloney, “International Financial Governance, the EU and Brexit: The Agentification of EU Financial Governance and the Implications” (2016) 17 European Business Organisation Law Review 451; R. Lastra, “Banking Union and the Single Market: Conflict or Companionship?” (2013) 36 Fordham International Law Journal 1190; K. Alexander, “European Banking Union: A Legal and Institutional Analysis of the Single Supervisory Mechanism and the Single Resolution Mechanism” (2015) 40 European Law Review 154.

8 On the implementation of the FSB Key Attributes in the EU see N. Coleman, A. Georgosouli and T. Rice, “Measuring the Implementation of the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions in the European Union” (2018) International Finance Discussion Paper 1238, available at https://www.federalreserve.gov/econres/ifdp/measuring-the-implementation-of-the-fsb-key-attributes-of-effective-resolution-regimes.htm (last accessed 12 December 2020).

9 A.M. Slaughter, A New World Order (Princeton 2004) (providing perhaps the most influential account); D. Zaring, “International Law by Other Means: The Twilight Existence of International Financial Regulatory Organizations” (1998) 33 Texas International Law Journal 281; P.H. Verdier, “Transnational Regulatory Networks and Their Limits” (2009) 34 Yale Journal of International Law 113.

10 R. Lastra (ed.), Cross-Border Bank Insolvency (Oxford 2011); S. Gadinis, “The Financial Stability Board: The New Politics of International Financial Regulation” (2013) 48 Texas International Law Journal 157; E. Hupkes, “Resolving Systemically Important Financial Institutions (SIFIs): The Financial Stability Board Key Attributes of Effective Resolution Regimes” in J.R. LaBrosse, R.O. Caminal and D. Singh (eds.), Financial Crisis Containment and Government Guarantees (Cheltenham 2013); J.H. Binder and D. Singh (eds.), Bank Resolution: The European Regime (Oxford 2016); M. Lehmann, “Bail-in and Private International Law: How to Make Bank Resolution Measures Effective across Borders” (2017) 66 I.C.L.Q. 107.

11 Article 50 of the Treaty of the European Union (TEU) provides the legal basis for the UK withdrawal from the EU. The UK withdrew from the EU on 31 January 2020. Council Decision (EU) 2020/135 (OJ 2020 L 29 p.1). See also discussion in Section II(F) below.

12 My working definition of “transnational regulatory networks” broadly follows Slaughter's definition. Slaughter, A New World Order, 14.

13 FSB, “Key Attributes”, 1.

14 FSB, “Key Attributes”, Key Attributes (hereafter “KAs”) 1–6.

15 FSB, “Key Attributes”, KAs 7–9.

16 FSB, “Key Attributes”, KAs 10–12.

17 World Bank Group Financial Sector Advisory Centre, “Bank Resolution and ‘Bail In’ in the EU”.

18 Directive 2014/59/EU (OJ 2014 L 173 p.190) (hereafter “BRRD”). In June 2019, Directive (EU) 2019/879 (OJ 2019 L 150 p.296) (hereafter “BRRD II”) amended the BRRD to bring it in line with the FSB Total Loss Absorbing Capacity (TLAC) requirements.

19 Coleman, Georgosouli and Rice, “Measuring the Implementation of the FSB Key Attributes”.

20 BRRD, art. 1(1).

21 The Directive is further supplemented with more detailed implementing and regulatory standards as well as non-binding recommendations and guidance.

22 World Bank Group Financial Sector Advisory Centre, “Bank Resolution and ‘Bail In’ in the EU”.

23 C. Bates, “UK Implementation of the EU Bank Recovery and Resolution Directive: What You Need to Know”, available at https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2015/01/uk-implementation-of-the-eu-bank-recovery-and-resolution-directive-what-you-need-to-know.pdf (last accessed 1 May 2020).

24 TEU, art. 4(3); and Treaty on the Functioning of the European Union (hereafter “TFEU”), art. 291(1).

25 This is further discussed in Section II(E) below.

26 W. Sandholtz and A. Stone Sweet (eds.), European Integration and Supranational Governance (Oxford 1998). For a critical appraisal see, A. Schout and S. Wolff, “The ‘Paradox of Lisbon’: Supranationalism–Intergovernmentalism as an Administrative Concept” in F. Laursen (ed.), The EU's Lisbon Treaty: Institutional Choices and Implementation (London 2012), ch. 2.

27 See European Parliament and Council Regulation (EU) 1093/2010 (OJ 2010 L 331 p.12) (hereafter “EBAR”); Regulation (EU) (OJ 2010 L 331 p.84) (hereafter “ESMA”); and (EU) Regulation 1094/2010 (OJ 2010 L 331 p.48). Regulation (EU) 1092/2010 (OJ 2010 L 331 p.1); and Council Regulation 1096/2010 (OJ 2010 L 331 p.162).

28 Lastra, “Banking Union and the Single Market”.

29 BRRD, art. 125(1) brings national resolution authorities within the definition of “competent authority” of the EBA Regulation and, hence within the EBA's remit.

30 EBAR, arts. 8(1), 10–19. Certain of the EBA powers are discussed below in Section IV.

31 G. Dell'Ariccia et al., “Managing the Sovereign–Bank Nexus” (2016) IMF Departmental Paper No 18/16, available at https://www.imf.org/en/Publications/Departmental-Papers-Policy-Papers/Issues/2018/09/14/Managing-the-Sovereign-Bank-Nexus-45133 (last accessed 1 May 2020).

32 Regulation 806/2014 (OJ 2014 L 225 p.1) (hereafter “SRMR”). In June 2019, Regulation (EU) 2019/877 (OJ 2019 L 150 p.226) (hereafter “SRMR II”) amended SRMR to bring it in line with the TLAC requirements of the FSB.

33 Council Regulation (EU) No 1024/2013 (OJ 2013 L 287 p.63) (hereafter “SSMR”). On EDIS, see European Commission, “A Stronger Banking Union: New Measures to Reinforce Deposit Protection and Further Reduce Banking Crisis” (2015) European Commission Press Release IP/15/6152, available at https://ec.europa.eu/commission/presscorner/detail/en/IP_15_6152 (last accessed 1 May 2020).

34 SRMR, art. 7(1).

35 Case 9-56, Meroni & Co Industrie Metallurgiche SpA v High Authority of the European Coal and Steel Community [1957–58] E.C.R. 133. See further Judgment of 22 January 2014, United Kingdom, C-270/12, EU:C:2014:18 (for a more flexible interpretation of the Meroni doctrine as regards the delegation of certain powers to ESMA); and M. Bozina Beros, “Some Reflections on the Governance Framework of the Single Resolution Board” (2018) 56 Journal of Common Market Studies 646.

36 Preamble to the SRMR at [24].

37 TFEU, art. 127(1), (2), (6).

38 TFEU, arts. 107–109 constitute the core Treaty provisions on state aid. The special rules on the use of state aid in response to the financial and economic crisis can be found in Commission Communication (OJ 2009 C10 p.2).

39 SRMR, arts. 8, 10, 18, 22 (1). On the Single Resolution Fund (SRF), see SRMR, arts. 1, 67–79, and Council Press Release (2014) 10088/1, available at http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%2010088%202014%20INIT (last accessed 1 November 2020) (about the intergovernmental agreement on the transfer and mutualisation of contributions to a single resolution fund that will be established as part of Europe's banking union). See further F. Fabbrini, “On Banks, Courts and International Law: The Intergovernmental Agreement on the Single Resolution Fund in Context” (2014) 21 Maastricht Journal of European & Comparative Law 444 (taking a sceptical stance on the wisdom to rely on international law).

40 SRMR, arts. 28, 29 (2), 31 (1), 34–37, 38–39. I examine some of those powers below in Section IV.

41 SRMR, art. 2 (scope).

42 SRMR, art. 7(2).

43 The exceptions are set out in SRMR, arts. 7(3), 7(4)(b), 7(5).

44 Commission Communication (COM/2012/0510).

45 For a classic discussion, see G. Majone, Regulating Europe (London 2004).

46 The types of the legal acts of the EU, see TFEU, art. 288. For a critical analysis of EU soft law, see E. Krokea-Aho, “EU Soft Law in Domestic Legal Systems: Flexibility and Diversity Guaranteed?” (2009) 16 Maastricht Journal of European & Comparative Law 271, 273–78. On the ECJ recognition of the legal effect of EU soft law, see notably Case C-322/88, Salvatore Grimaldi v Fonds des maladies professionnelles [1989] E.C.R. 4407.

47 BRRD, arts. 31(2), 32(2), 34(1), 44(3), respectively.

48 BRRD, arts. 10(9), 39(4), respectively.

49 Lastra, “Banking Union and the Single Market”.

50 M.S. Kuo, “From Administrative Law to Administrative Legitimation: Transnational Law and the Process of European Integration” (2012) 61 I.C.L.Q. 855, 855–56; and L.S. Finkelstein, “What Is Global Governance” (1995) 1 Global Governance 367, 369–70.

51 Finkelstein “What Is Global Governance”, 367 (noting that global governance often includes information sharing and consensus building).

52 Verdier, “Transnational Regulatory Networks and Their Limits”, 130.

53 Ibid., at 130.

54 A. Bradford, The Brussels Effect: How the European Union Rules the World (Oxford 2020).

55 A. Lehmann, “Bank Regulation in the European Union Neighbourhood: Limits of the ‘Brussels Effect’”, Bruegel Blogpost, available at https://www.bruegel.org/2019/11/bank-regulation-in-the-european-union-neighbourhood-limits-of-the-brussels-effect/ (last accessed 1 November 2020).

56 Bradford, The Brussels Effect, ch. 9.

57 S.T. Omarova, “The Too Big to Fail Problem” (2019) 103 Minnesota Law Review 2495, 2500; A.E. Wilmarth Jr, “Reforming Financial Regulation to Address the Too-Big-to-Fail Problem” (2010) 35 Brooklyn Journal of International Law 707, 739–42.

58 FSB, “Key Attributes”, KA 6.1.

59 FSB, “Key Attributes”, KAs 6.4, 6.2.

60 FSB, “Key Attributes”, KA 6.5.

61 Coleman, Georgosouli and Rice, “Measuring the Implementation of the FSB Key Attributes”.

62 BRRD, arts. 38–39, 40–41, 42, 43–55.

63 BRRD, arts. 56–58.

64 BRRD, art. 56(3).

65 BRRD, art. 56(1).

66 Extraordinary public financial support should not be confused with emergency liquidity assistance. See BRRD, art. 2(1)(28), (29), respectively; and TFEU, arts. 107(1), (3)(b).

67 BRRD, art. 32(1).

68 B. Mesnard, A. Margerit and M. Magnus, “Precautionary Recapitalisations under the Bank Recovery and Resolution Directive: Conditionality and Case Practice” (2017) European Parliament Briefing PE 602.084, available at http://www.europarl.europa.eu/RegData/etudes/BRIE/2017/602084/IPOL_BRI(2017)602084_EN.pdf (last accessed 1 May 2020) (clarifying when an institution is deemed to be solvent and, hence, falling outside the scope of BRRD, art. 32(4)(a)–(c)).

69 Ibid.

70 Ibid. (noting that the responsibility for assessing the conditions for requesting precautionary recapitalisation lies primarily with the European Commission).

71 This part of the analysis is not concerned with the soundness of the FSB Key Attributes and its aim is not to defend it. It only outlines an interesting point of deviation.

72 BRRD, art. 1(1)(57). Italy is not unique. Other countries include Portugal, Spain and Cyprus. T. Philippon and A. Salord, “Bail-Ins and Bank Resolution in Europe: A Progress Report” (2017) Geneva Reports on the World Economy Special Report 4, 25.

73 These local conditions were hardly unique to Italy. See ibid. and further W. Bossu and D. Chew, “‘But We Are Different!’: 12 Common Weaknesses in Banking Laws, and What to Do about Them”, (2015) IMF Working Paper WP/15/200, 4, available at https://www.imf.org/en/Publications/WP/Issues/2016/12/31/But-we-are-different-12-Common-Weaknesses-in-Banking-Laws-and-What-to-Do-About-Them-43274 (last accessed 30 November 2020) (questioning the alleged uniqueness of local problems and conditions.

74 N. Veron, “Precautionary Recapitalisation: Time for a Review?” (2017) Issue 21 Bruegel Policy Contribution 7. Precautionary recapitalisation was also used in the cases of Piraeus Bank and National Bank of Greece, but this was done before the full entry into force of the BRRD on 1 January 2016. European Commission, “State Aid: Commission Approves Aid for Piraeus Bank on the Basis of an Amended Restructuring Plan”, available at http://europa.eu/rapid/press-release_IP-15-6193_en.htm (last accessed 1 May 2020).

75 Ministero dell’ Economia e delle Finanze, “Italian Banking Sector: Recent Developments and Reform”, available at http://www.mef.gov.it/focus/sistema_bancario/ITALIAN_BANKING_SECTOR.pdf (last accessed 1 May 2020) 15; Ministero dell’ Economia e delle Finanze, “Scheme Introduced to Facilitate the Disposal of Banks’ Bad Loans”, available at http://www.mef.gov.it/en/ufficio-stampa/comunicati/2016/Scheme-introduced-to-facilitate-the-disposal-of-banks-bad-loans-00001/ (last accessed 1 May 2020).

76 N. Veron, “In Depth Analysis – Precautionary Recapitalisation: Time for Review” (2017) European Parliament In-Depth Analysis PE 602.090, available at http://www.europarl.europa.eu/RegData/etudes/IDAN/2017/602090/IPOL_IDA(2017)602090_EN.pdf; and W.P. de Groen, “In depth analysis – Precautionary Recapitalisation: Time for Review”, available at https://www.ceps.eu/system/files/PrecautionaryRecapitalisations.pdf (last accessed 1 May 2020).

77 ECB, “ECB Deemed Veneto Banca and Banca Popolare di Vicenza Failing or Likely to Fail”, available at https://www.bankingsupervision.europa.eu/press/pr/date/2017/html/ssm.pr170623.en.html; SRB, “Notice Summarising the Effects of the Decision Taken in Respect of Banca Popolare di Vicenza S.p.A”, available at https://srb.europa.eu/sites/srbsite/files/23.6.2017_summary_notice_banca_popolare_di_vicenza_s.p.a._20.00.pdf; SRB, “Notice Summarising the Effects of the Decision Taken in Respect of Veneto Banca S.p.A”, available at https://srb.europa.eu/sites/srbsite/files/23.6.2017_summary_notice_veneto_banca_s.p.a_20.00.pdf (all last accessed 1 November 2020).

78 There are concerns that Atlante is conducive to the accumulation of systemic risk. See S. Merler, “An Italian Take on Banking Crisis”, available at http://bruegel.org/2016/10/an-italian-take-on-banking-crisis/ (last accessed 1 May 2020); and S. Merler, “A Tangled Tale of Bank Liquidation in Venice”, available at http://bruegel.org/2017/06/a-tangled-tale-of-bank-liquidation-in-venice/ (last accessed 1 May 2020).

79 Dell'Ariccia et al., “Managing the Sovereign–Bank Nexus”.

80 N. Veron and J. Zettelmeyer, “A European Perspective to Overindebtedness” (2017) Issue 25 Bruegel Policy Contribution, 9 (arguing for harmonisation “to phase out all existing options and national discretions that create distortions”).

81 TFEU, art. 5(3), (4). D. Chalmers, G. Davies and G. Monti, European Law, 3rd ed. (Cambridge 2014), 393, 394–95, 400–04; T.I. Harbo, “The Function of the Proportionality Principle in EU Law” (2010) 16 European Law Journal 158, 171–80. On the application of the principle of proportionality by the ECJ, see notably Case C-380/03, Germany v Parliament and Council [2006] E.C.R. I-11573 and Case C-310/04, Spain v Council [2006] E.C.R. I-7285.

82 SRMR, art. 7(1).

83 EBAR, arts. 1(5), 8(1).

84 V.V. Acharya and S. Steffen, “The Importance of a Banking Union and Fiscal Unions for Capital Markets Union” (2017) European Commission Fellowship Initiative Challenges to Integrated Markets Discussion Paper 062, available at https://ec.europa.eu/info/sites/info/files/dp_062_en.pdf (last accessed 1 May 2020).

85 EBAR, arts. 1(5), 8(1).

86 E. Bjerregaard and T. Kirchmaier, “The Danske Bank Money Laundering Scandal: A Case Study” (2019) Copenhagen Business School 1, 36–37, available at https://papers.ssrn.com/sol3 papers.cfm?abstract_id=3446636 (last accessed 30 November 2020).

87 See new Article 9b of the Omnibus Regulation (EU) 2019/2175; and further EBA, “Anti-money Laundering and Countering the Financing of Terrorism”, 10–11, available at https://eba.europa.eu/sites/default/documents/files/document_library/ News%20and%20Press/Communication%20materials/Factsheets/883592/Anti-money%20laundering%20and%20countering%20the%20financing%20of%20terrorism_EBA%20Factsheet.pdf (last accessed 30 November 2020).

88 P. Schammo, “Actions and Inactions in the Investigations of Breaches of Union Law by the European Supervisory Authorities” (2018) 55 C.M.L.Rev. 1423, 1431–37.

89 See European Commission, “Public Consultation on the Operations of the European Supervisory Authorities”, 10 (in particular footnote 26), available at https://ec.europa.eu/info/sites/info/files/2017-esas-operations-consultation-document_en.pdf (last accessed 1 May 2020).

90 Ibid., “A. Optimizing Existing Tasks and Powers; 1 Supervisory Convergence”. Other factors include the nuanced nature of the quasi-enforcement power and the risk of legal contestation.

91 EBAR, art. 40(1).

92 European Commission, “Public Consultation”, “II. Governance of the ESAs”.

93 “European Commission, “Public Consultation”, “II. Governance of the ESAs”.

94 International Monetary Fund, “Financial Assessment of the European Union – Issues in Transparency and Accountability” (2013) IMF Country Report No 13/65, available at https://www.imf.org/external/pubs/ft/scr/2013/cr1365.pdf (last accessed 1 May 2020); “Feedback Statement on the Public Consultation on the Preparations of the European Supervisory Authorities Having Taken Place from 21 March to 16 May 2017”, 6, 8–9, available at https://ec.europa.eu/info/sites/info/files/2017-esas-operations-summary-of-responses_en.pdf (last accessed 1 May 2020).

95 EBAR, art. 1(5) (connecting the pursuit of public interest with the economy, citizens and business of the EU instead of those of the Member States).

96 International Monetary Fund, “Financial Assessment of the European Union”, 15–16. On the ability of national actors to control the outcome of the decisions of EU agencies, see further S. Griller and A. Orator, “Everything under Control? A Way Forward for European Agencies in the Footsteps of the Meroni Doctrine” (2010) 35 European Law Review 3.

97 International Monetary Fund, “Financial Assessment of the European Union”, 6 (calling for greater transparency). See further Schammo, “Actions and Inactions”, 1451 (whose recommendations embed a similar logic).

98 In the EU Regulatory State, the forums form vertical, horizontal and diagonal relationships often transcending jurisdictional boundaries. An implication of this is that actors (e.g. national resolution authorities) may be accountable to forums, which are not their democratic “principals” in the strict sense of the term. Y. Papadopoulos, “Problems of Democratic Accountability in Network and Multilevel Governance” (2007) 13 European Law Journal 469, 472. See further M. Bovens, “Analysing and Assessing Accountability: A Conceptual Framework” (2007) 13 European Law Journal 447, 450, 455–57, 460.

99 EBAR, art. 16(3).

100 The publication of reasons of non-compliance is left to the discretion of ESAs. EBAR, art. 16(3), (4).

101 C. Coglianese and D. Laser, “Management-based Regulation: Prescribing Private Management to Achieve Public Goals” (2003) 37 Law and Society Review 691. For a critical analysis of embedded limitations, see C. Coglianese, “The Limits of Performance-based Regulation” (2017) 50 University of Michigan Journal of Law Reform 525.

102 “Feedback Statement on Public Consultation”, 6.

103 D. McBarnet and C. Whelan, “The Elusive Spirit of the Law: Formalism and the Struggle of Legal Control” (1991) 54 M.L.R. 848.

104 SRMR, arts. 2, 7. The resolution of the Banco Popular Espanol SA offers a classic example of the leadership and approach of the SRB and its interaction with national resolution authorities. R. Peruyevo, “Spain: The Single Resolution Mechanism and the Resolution of Banco Popular Espanol SA” (2018) 33 Butterworths Journal of International Banking & Financial Law 63–64.

105 SRMR, arts. 34–37, 38, 39. These powers may also be exercised against private parties when an SRB decision is directed to them. SRMR, art. 85 provides a right to appeal. See further Preamble to the SRMR at [24].

106 SRMR, art. 28.

107 SRMR, Preamble [12].

108 SRMR, Preamble [10].

109 A. Georgosouli, “Regulatory Incentive Realignment and the EU Legal Framework of Bank Resolution” (2016) 10 Brooklyn Journal of Corporate Financial & Commercial Law 343, 356–66 (discussing the complementarity and potential conflict between the SRB and the EBA).

110 SRMR, arts. 51(3), 53(3), respectively.

111 The appointment of the SRB representative in the EBA Resolution Committee is set out in SRMR, art. 30(5). Furthermore, all members can vote (EBAR, art. 127).

112 In relation to the SSM and the supervisory function of the EBA vis a vis the ECB, Eilis Ferran argues that within this new convoluted architecture the EBA's role is likely to be that of managing “co-existence”. A similar observation could be made about the EBA's role in the SRM. E. Ferran, “The Existential Search of the European Banking Authority” (2016) 17 European Business Organisation Law Review 285, 291, 308. On constitutional tensions that arise due to the institutionally ambivalent nature of the ESAs including the EBA, see P.P. Craig, “Comitology, Rulemaking and the Lisbon Treaty: Tensions and Strains” in C.F. Bergstrom and D. Ritleng (eds.), Rulemaking by the European Commission: The New System for Delegation of Powers (Oxford 2016), 173–202.

113 SRMR, art. 7(2).

114 M. Cihak, A. Demirguc-Kunt and R. Barry Johnston, “Incentive Audits: A New Approach to Financial Regulation” (2013) Policy Research Working Paper No. 6308, 4, available at https://openknowledge.worldbank.org/handle/10986/12199 (last accessed 1 May 2020); R. Levine, “The Sentinel: Improving the Governance of Financial Regulation” (2009), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1498757 (last accessed 1 May 2020).

115 TFEU, art. 228 and Charter of Fundamental Rights of the European Union, art. 43. The main task of the European Ombudsman is to conduct inquiries into cases of EU maladministration.