Single Resolution Mechanism Regulation (SRMR)

Scope and purpose

The Single Resolution Mechanism Regulation (Regulation (EU) 806/2014) is the banking union counterpart to the BRRD. While the BRRD sets out the substantive resolution framework for the whole EU, the SRMR centralises the exercise of that framework for the Member States participating in the banking union. It establishes the Single Resolution Mechanism (SRM) and creates the Single Resolution Board (SRB) as the central resolution authority, together with the Single Resolution Fund (SRF) financed by contributions from the banking sector.

The SRMR mirrors the BRRD's substance — resolution planning, the failing-or-likely-to-fail and public interest conditions, the resolution tools and safeguards, and MREL — but assigns the decisions to the SRM. Under a division of tasks, the SRB is directly responsible for the most significant banks (broadly those under ECB direct supervision and cross-border groups), while national resolution authorities handle the rest and implement SRB decisions at national level.

Who is bound

Being a regulation, the SRMR is directly applicable in the participating Member States without transposition. It binds the SRB, the participating national resolution authorities and the banks within the SRM's remit. Its geographic scope is the banking union — the euro area plus any non-euro Member States that opt in through close cooperation — which distinguishes it from the EU-wide reach of the BRRD.

The 2019 banking package

The SRMR was amended in parallel with the BRRD by the 2019 banking package. Regulation (EU) 2019/877 (often called SRMR II) aligned the MREL provisions with the recast BRRD II regime, embedding the resolution entity and resolution group concepts, internal MREL and the TLAC-consistent calibration for the largest banks, so that the centralised mechanism operates on the same updated rules as the wider directive.

Relevance for banks and investors

For banks in the banking union, the SRMR determines who their resolution authority is, how their resolution plan and MREL target are set, and how the Single Resolution Fund could be used. For investors, it clarifies the institutional architecture behind a resolution: whether the SRB or a national authority would lead, how decisions are taken and funded, and how the banking union's centralised approach shapes the predictability of outcomes. The seniority and bail-in treatment of instruments follow the same principles as under the BRRD, applied through the SRM's institutions.