Public interest assessment

Definition

The public interest assessment is the resolution authority's judgement on whether resolving a failing bank is necessary to protect critical functions, financial stability or public funds — or whether normal insolvency proceedings suffice.

The gatekeeper of resolution

A bank may only be resolved if resolution is necessary for, and proportionate to, one or more of the resolution objectives of Article 31 BRRD — continuity of critical functions, financial stability, protection of public funds, of covered depositors and of client assets — and if winding the bank up under normal insolvency would not achieve those objectives to the same extent.

How it has been applied

The assessment is made case by case at the moment of failure, and it has drawn the practical boundary of the banking union's regime: affirmative for Banco Popular and for Sberbank Europe's Croatian and Slovenian subsidiaries, negative for the Veneto banks, ABLV, PNB Banka and Sberbank's Austrian parent, which all exited through national procedures. The pending CMDI reform proposes to widen the assessment so that resolution captures more mid-sized banks.