The five objectives
The resolution objectives are the set of statutory aims a resolution authority must pursue whenever it uses resolution powers. The BRRD lists five: ensuring the continuity of critical functions; avoiding significant adverse effects on financial stability, including by preventing contagion and maintaining market discipline; protecting public funds by minimising reliance on extraordinary public financial support; protecting depositors covered by a deposit guarantee scheme and investors covered by an investor compensation scheme; and protecting client funds and client assets.
The objectives are of equal importance in principle, and the authority must balance them as appropriate to the nature and circumstances of each case. They are pursued with the general aim of avoiding a destabilising failure while imposing losses first on shareholders and then creditors, consistent with the creditor hierarchy and the no creditor worse off safeguard.
Role in the resolution framework
The objectives are not abstract aspirations; they are the yardstick against which resolution decisions are tested. The public interest assessment turns on whether resolution, rather than normal insolvency, is necessary to meet one or more of these objectives to a greater extent. If ordinary insolvency proceedings would achieve the objectives equally well, resolution is not in the public interest and the bank is liquidated instead.
They also drive the design of resolution plans and strategies. Because continuity of critical functions is an objective, planning identifies those functions and builds the chosen strategy around keeping them running. Because protecting covered deposits and public funds are objectives, the framework relies on loss-absorbing capacity such as MREL so that private creditors, not taxpayers, bear losses.
Legal basis
The resolution objectives are set out in Article 31 of the BRRD, which lists the five objectives and states that they are of equal significance and must be balanced as appropriate. Within the banking union the equivalent provision is Article 14 of the SRMR, which binds the Single Resolution Board to the same objectives when it adopts resolution schemes. The objectives are referenced throughout the resolution provisions, in particular in the conditions for resolution and the public interest assessment.
Practical relevance for banks and investors
For banks, the objectives explain why resolution planning concentrates on identifying and protecting critical functions and on ensuring sufficient loss-absorbing capacity: these are the operational consequences of the statutory aims. Measures that would undermine the objectives, such as structures that trap critical services in an entity that cannot be kept open, are treated as impediments to resolvability.
For investors, the objectives clarify the logic of loss allocation. The aim of protecting public funds and covered depositors, combined with the requirement to respect the creditor hierarchy, means that shareholders and subordinated, then senior, creditors are expected to absorb losses before any recourse to public support. Reading a resolution action through the objectives helps investors anticipate which liabilities are most exposed and why an authority might keep some entities open while winding others down.