How it works

A resolution group is built around a single resolution entity. It consists of that resolution entity plus the subsidiaries it controls that are not themselves resolution entities and that do not belong to another resolution group. The perimeter follows the chosen resolution strategy. Under a single point of entry (SPE) strategy a banking group typically forms one resolution group headed by the parent; under a multiple point of entry (MPE) strategy the group is divided into several resolution groups, each with its own resolution entity and its own external loss-absorbing capacity.

Within a resolution group loss-absorbing capacity is arranged hierarchically. The resolution entity raises external MREL from third-party investors, while operating subsidiaries that are not resolution entities hold internal MREL — instruments subscribed, directly or indirectly, by the resolution entity higher up the chain. When a subsidiary reaches the point of non-viability, its losses are transferred upward through write-down or conversion of that internal MREL, so that the resolution entity and ultimately its external creditors absorb them. This design keeps the intervention concentrated at the point of entry and avoids applying resolution tools separately at each operating company.

The paired concepts of resolution entity and resolution group were introduced into the BRRD by the 2019 banking package (Directive 2019/879, BRRD II) and mirrored in the SRMR. Their definitions sit in the definitions article of each instrument (BRRD Art. 2(1)). The loss-transfer mechanics that make a resolution group operational are governed by the internal MREL regime in BRRD Art. 45f, which requires subsidiaries that are not resolution entities to maintain loss-absorbing resources issued to the resolution entity. Resolution planning under BRRD Arts. 10–14 identifies, for each group, how many resolution entities and resolution groups exist.

Relevance for banks and investors

For issuers, the resolution group perimeter determines where external MREL must be placed with the market and where internal MREL is downstreamed to subsidiaries. It shapes the group's issuance structure, its intragroup guarantees and the location of its debt-issuing vehicles.

For investors, the perimeter clarifies how a given instrument would behave in resolution. Debt issued by the resolution entity is external, third-party loss-absorbing capacity that is directly exposed to bail-in. Instruments issued by a subsidiary that is not a resolution entity are usually internal MREL, absorbed within the group rather than by the wider market. Identifying which resolution group an issuer sits in, and whether it is the resolution entity or a liquidation entity, is therefore central to assessing the seniority and bail-in risk of its liabilities.