{"id":1934,"date":"2019-02-19T13:59:08","date_gmt":"2019-02-19T12:59:08","guid":{"rendered":"https:\/\/bfg.pl\/?page_id=1934"},"modified":"2019-02-20T11:42:08","modified_gmt":"2019-02-20T10:42:08","slug":"resolution-in-questions-and-answers","status":"publish","type":"page","link":"https:\/\/bfg.pl\/en\/resolution\/resolution-in-questions-and-answers\/","title":{"rendered":"Resolution in questions and answers"},"content":{"rendered":"

Why has the Polish Parlament adopted the Act of 10 June 2016 on the Bank Guarantee Fund, Deposit Guarantee Scheme and Resolution?<\/strong><\/p>\n

The Act implements the Bank Recovery and Resolution Directive (BRRD) and the Directive on Deposit Guarantee Schemes into the Polish law. Poland is obliged to implement these Directives due to the membership of the European Union.<\/p>\n

Why has the BRRD been adopted?<\/strong><\/p>\n

The last financial crisis revealed that the Member States of the European Union did not have tools appropriate for liquidation of large financial institutions being under the bankruptcy threat which were not able to continue their business independently due to their weak financial situation. At the same time, the systemic risk occured. There were fears that uncontrolled bankruptcy of \u201etoo big to fail\u201d financial institutions would pose a threat to their clients and to the economy as a whole. Having no appropriate tools at their disposal, the Member States granted aid to threatened entities from their national budgets. The European Commission came to the conclusion that taxpayers should not bear the costs of rescuing the \u201etoo big to fail\u201d financial institutions. The decision was taken that the responsibility should be borne in the first place by owners and then by creditors of entities under the bankruptcy threat.<\/p>\n

The provisions of the BRRD require the Member States to vest a designated institution with tools which enable the conduct of resolution. Owing to these tools the systemic risk can be controlled in a better way.<\/p>\n

Which institution has been designated by the Sejm to conduct resolution?<\/strong><\/p>\n

The Bank Guarantee Fund has been entrusted with execution of these tasks.<\/p>\n

When did the new Act enter into force?<\/strong><\/p>\n

The Act entered into force on 9 October 2016.<\/p>\n

What entities can be subject to resolution?<\/strong><\/p>\n

The resolution procedure can cover commercial banks, cooperative banks, credit unions and certain brokerage houses.<\/p>\n

Whenever the expression \u201ea threatened entity\u201d is used hereinafter, this wording may concern a bank, credit union or brokerage house.<\/em><\/p>\n

What is resolution?<\/strong><\/p>\n

It is restructuring of the business of a threatened entity which is not able to continue its operation independently in the case when its bankruptcy could pose a serious threat to its clients and the economy as a whole.<\/p>\n

Within resolution, existing owners loose their powers which are acquired by the BGF and have to bear losses generated in the entity. A part of its business which is \u201ehealthy\u201d and important for the clients and for the economy is continued, whereas the remaining one is subject to liquidation.<\/p>\n

The BGF initiates resolution if it is necessary in the public interest.<\/p>\n

What does it mean that resolution can be conducted only in the public interest?<\/strong><\/p>\n

Resolution measures can be deemed by the BGF necessary in the public interest when they are essential to:<\/p>\n