Author/Editor:

International Monetary Fund. Monetary and Capital Markets Department

Publication Date:

June 12, 2018

Electronic Access:

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Summary:

The bank resolution and crisis management toolkit has been significantly revamped since the last FSAP. The implementation of the Bank Resolution and Recovery Directive (BRRD) in Romania enhanced the National Bank of Romania (NBR)’s powers to deal with failing banks, while the Bank Deposit Guarantee Fund (FGDB) gained greater involvement in these processes, and important new tools for resolution are now established in the law. As the resolution authority, the NBR received the power to: (i) take control of an institution (intervention); (ii) transfer the shares or any other instruments of ownership, rights, assets, or liabilities (purchase and assumption); (iii) cancel debt instruments; and (iv) write down/convert into common shares or other instruments of ownership the eligible liabilities of an institution under resolution (bail-in). Furthermore, in exceptional circumstances, if all other resolution tools were insufficient, and financial stability remained at stake, public equity support and temporary public ownership may also be applied. To date, none of the new tools and powers have been exercised. Finally, the NBR has been charged with new responsibilities that flow from its ongoing role as supervisory and resolution authority, namely the enforcement and analysis of recovery planning requirements and the preparation of resolution plans.