Moratorium · Banking Resolution

Moratorium

Definition

The moratorium is the power to suspend a failing bank's payment and delivery obligations for up to two business days, buying the resolution authority time to complete a determination or prepare a resolution action.

The power

Introduced by the 2019 banking package, Article 33a BRRD lets authorities suspend a bank's payment and delivery obligations once it has been determined failing or likely to fail, for a maximum of two business days. Covered deposits enjoy a daily-amount carve-out so depositors keep access to living expenses, and the suspension can extend to secured creditors and termination rights.

First use

The SRB used the power for the first time on 28 February 2022, freezing Sberbank Europe and its Croatian and Slovenian subsidiaries while it prepared the decisions announced on 1 March — sales of the two subsidiaries and insolvency for the Austrian parent. The episode turned a theoretical tool into standard crisis-management practice for liquidity-driven failures.