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# European Parliament Approves Major Banking Crisis Management Overhaul
- URL: https://www.theglobalbanker.com/european-union-parliament-approves-major-banking-crisis-management-overhaul/
- Published: 2026-03-26T21:32:42.000Z
- Updated: 2026-10-01T23:24:31.000Z
- Description: The European Parliament has approved reforms to strengthen bank resolution and deposit protection, which a rapporteur called an important first step towards completing the banking union.
- Author: TGB Editorial Team
- Tags: Regulations, Europe

The European Parliament has approved a comprehensive crisis management and deposit insurance package that revises how the European Union handles bank failures and protects depositors. Parliament gave its approval on 26 March 2026.

The package encompasses three critical legislative instruments: the Bank Recovery and Resolution Directive (BRRD), the Single Resolution Mechanism Regulation (SRMR), and the Deposit Guarantee Schemes Directive (DGSD). Together, the reforms are intended to make the EU crisis management framework stronger and more coherent and to harmonise the use of resolution tools across the Union.

#### EXPANDING RESOLUTION FOR SMALLER BANKS

The package expands the resolution system to small and medium-sized banks where resolution is in the public interest, extending procedures previously mandatory only for large institutions. Luděk Niedermayer, the European Parliament's rapporteur on the BRRD, emphasized the complexity of the negotiation: "This was a very complex file, both economically and politically. However, it makes the EU crisis management framework stronger and more coherent. It broadens the resolution system, in particular for small and medium-sized banks, improves predictability, and harmonises the use of tools across the Union."

The standard EU guarantee of €100,000 per depositor per bank is unchanged, certain deposits linked to real-estate transactions are protected at between €500,000 and €2.5 million depending on circumstances, and a new repayment hierarchy ranks deposit guarantee schemes first, followed by retail depositors and SMEs. 

#### MARKET-BASED SOLUTIONS TAKE PRIORITY

The package aims to reduce reliance on taxpayers' money by promoting market-based solutions, with costs borne primarily by shareholders and creditors. A failing bank must absorb losses equal to at least 8% of its total liabilities and own funds before resolution funding can be used, and a new 'bridge the gap' mechanism lets deposit guarantee scheme funds help banks meet that threshold.

Irene Tinagli, the rapporteur for the SRMR reforms, highlighted this balance: "The reform of bank crisis management and deposit insurance framework marks a decisive improvement, making resolution more credible and accessible for small and medium-sized banks, while preserving a prudent framework with loss-absorbing capacity as the first line of defence. At the same time, the agreement strengthens the effective use of industry-funded instruments within a clear and robust framework."

#### NEXT STEPS

The new rules will enter into force on the twentieth day following publication in the Official Journal of the European Union, with most provisions applying 24 months after entry into force. 

#### FOUNDATION FOR FURTHER INTEGRATION

Kira Marie Peter-Hansen, Parliament's rapporteur on the deposit guarantee schemes directive, called the package an important first step towards completing the banking union. She said more ambitious action was still needed to complete the banking union, including a fully-fledged European deposit insurance scheme.