ZBB 2026, 210

RWS Verlag Kommunikationsforum GmbH & Co. KG, Köln RWS Verlag Kommunikationsforum GmbH & Co. KG, Köln 2199-1715 Zeitschrift für Bankrecht und Bankwirtschaft ZBB 2026 ArticlesRastko Vrbaski*

Public support for bank resolution

Resolution preserves a failing bank’s critical functions to support financial stability. Resolution costs are funded from the bail-in of creditors’ claims that the bank is required to hold or funds to which the industry contributes, such as deposit insurance funds or dedicated resolution funds. Public resources may sometimes be needed to enhance a bank’s internal resources and those of industry-sourced funds, and jurisdictions have adopted a variety of policies to deploy and recoup such public support. Resolution frameworks should integrate well-defined public support arrangements to enhance financial stability and contain adverse social costs. Elements to consider include the last resort principle, codified policies and procedures to recoup the public support, adequate governance arrangements and, subject to appropriate safeguards, some flexibility to deal with systemic risks.

Contents

  • I. Introduction
  • II. Public support for resolution actions
  • III. Approaches to public support in resolution across jurisdictions
    • 1. Institutional models
    • 2. Conditionalities
    • 3. Caps, terms and provisions
    • 4. Recoupment
  • IV. Policy reflections
    • 1. Credibility
    • 2. Burden-sharing across the financial system
    • 3. Residual risk
    • 4. Flexibility
  • V. Conclusion
*
*)
Senior Advisor, Bank for International Settlements, Basel. This paper was first published as FSI Insight 67, and presented by one of the authors, Rastko Vrbaski, at the SRB Legal Conference in 2025.

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