What counts as an impediment
An impediment to resolvability is any characteristic of a bank that would obstruct the feasible and credible execution of its resolution strategy. Impediments emerge from the resolvability assessment: wherever the authority concludes that liquidation or resolution could not be carried out in an orderly way that preserves critical functions and financial stability, the reason for that conclusion is an impediment to be addressed.
Impediments can be structural, financial, operational, legal or informational. Common examples include insufficient loss-absorbing and recapitalisation capacity (an MREL shortfall), a group or liability structure that would make bail-in hard to apply, service or IT dependencies that would not survive resolution (a failure of operational continuity), contracts governed by third-country law without contractual recognition of bail-in or of temporary stays, uncertain access to financial market infrastructures, and management information systems that could not produce a timely valuation.
How authorities address them
The framework distinguishes the identification of impediments from the powers to remove them. After identifying a substantive impediment, the authority normally gives the institution an opportunity to propose measures to address it. If the proposed measures are inadequate, the authority can direct the bank to take specified actions, which may be far-reaching, such as changing legal or operational structures, divesting assets, limiting activities, issuing additional eligible liabilities to meet MREL, or altering intra-group arrangements. These powers are deliberately strong because credible resolvability is a precondition for the whole regime.
Legal basis
Under the BRRD, the power to address or remove impediments to resolvability is set out in Articles 17 and 18: Article 17 covers individual institutions and Article 18 covers the group dimension, including the procedure by which the authority notifies the impediment, considers the institution's proposed measures and, failing agreement, requires alternative measures. Within the banking union, the Single Resolution Board exercises these powers under the SRMR, notably Article 10(9) to (11), which mirror the identification-and-removal procedure. The catalogue of measures the authority can require is proportionate to the impediment and must have regard to its effect on the business.
Practical relevance for banks and investors
For banks, removing impediments is a continuous, resource-intensive part of resolution planning. Because the authority can compel structural and financial change, unresolved impediments can force reorganisation, additional issuance or restrictions on activities and, ultimately, on distributions. Firms therefore work to close identified gaps ahead of formal directions.
For investors, publicly flagged impediments and the measures taken to remove them are informative signals. A persistent MREL shortfall or a structural impediment may translate into additional subordinated issuance, affecting supply in senior non-preferred and other MREL-eligible classes, while progress in removing impediments strengthens the credibility that failure would be handled through resolution rather than disorderly insolvency.