Draft law on forced bank restructuring
The Ministry of Finance has prepared a draft amendment to the Act on the Bank Guarantee Fund, Deposit Guarantee Scheme and Forced Restructuring (BFG) in order to adapt Polish regulations to the EU. As a member of the EU, Poland is obliged to implement the provisions of the EU Directive regulating loss-absorbency and recapitalisation of credit institutions and investment firms (BRRDII) by 28 December 2020.
The Directive amends the minimum own funds and eligible liabilities requirement (MREL) so that banks can be restructured quickly and efficiently without destabilising the financial system. Apart from MREL, the Ministry of Finance has included among the significant changes planned for implementation:
The introduction of the new terms ‘resolution entity’ and ‘resolution group’;
The introduction of a moratorium, i.e. the power for the forced resolution authority to temporarily suspend certain liabilities to certain creditors of the entity before the resolution process is initiated, but after the bank is deemed to be failing.
In addition, the amendment contains provisions aimed at protecting retail investors in terms of investment in the bank’s debt securities that may be subject to bail-in.