This year’s decisions on resolution plans

Press release 20 December 2024

Effective crisis management of banks and other institutions requires thorough planning. The Resolution Board has made this year’s decisions on resolution plans for the eight systemically important banks, including updated Minimum Requirements for Own Funds and Eligible Liabilities (MREL).

The Swedish National Debt Office manages systemically important banks that have failed, or are at risk of failing, through resolution. If banks that are deemed systemically important were to be put into bankruptcy instead, the consequences for the financial system could be substantial. To be able to implement resolution, the Debt Office decides on MREL. These requirements are designed so that the banks’ shareholders and creditors – not taxpayers – are to bear the costs of crisis management.

The banks have developed several aspects of their work, but there are also areas in which we have identified a need for further measures

Since 1 January 2024, the systemically important banks must comply with the European Banking Authority’s (EBA) guidelines for resolvability as well. These guidelines are also intended to improve the feasibility of the Debt Office being able to carry out resolution.

“The Debt Office continues to work actively in order to strengthen its capability of managing banks in crisis through resolution. Part of this effort is evaluating the banks’ internal capacity and capabilities. The banks have developed several aspects of their work, but there are also areas in which we have identified a need for further measures,” says Debt Office Director General Karolina Ekholm.

The Debt Office deems eight banks to be systemically important.

Banks are to comply with the new EBA guidelines

The EBA’s guidelines for improving resolvability for institutions and resolution authorities (EBA/GL/2022/01) entered into force on 1 January 2024. These guidelines are a key tool in the Debt Office’s assessment of the banks’ resolvability. Insufficient compliance with the guidelines can be grounds for the Debt Office to determine that there are substantive impediments to resolution.

In 2024, the Debt Office has for the first time evaluated the banks’ compliance with the guidelines since they took effect. The Debt Office has not identified any substantive impediments to resolution. Nevertheless, the authority has identified a number of areas where measures must be taken in order to improve resolvability.

Most banks are not deemed systemically important

The majority of the banks for which the Debt Office conducts resolution planning are not deemed systemically important. The Debt Office is therefore planning for these to be wound up through bankruptcy or liquidation proceedings if they were to fail. For banks in this category, the Debt Office has made decisions on so-called simplified resolution plans and on MREL that does not exceed the capital requirements (investments firms are also included in this category).

Deposit insurance always applies

Regardless of how a bank in crisis is managed, deposit insurance applies. This means that the Debt Office pays out compensation to private individuals, companies, and other legal persons if a bank were to fail. Depositors’ money is protected up to the amount of SEK 1,050,000 per depositor and institution.

Read more about the Resolution Board.