European Union
On 20 April 2026, the final legislative texts implementing the Crisis Management and Deposit Insurance (CMDI) reform package was published consisting of:
- Regulation (EU) 2026/808 amending Regulation (EU) No 806/2014 (SRMR)
- Directive (EU) 2026/806 amending Directive 2014/59/EU (BRRD); and
- Directive (EU) 2026/804 amending Directive 2014/49/EU (DGSD).
The reform package, which was formally adopted on 30 March 2026, marks the conclusion of a legislative process that began with the European Commission’s proposal of 18 April 2023 and passed through a pivotal political agreement between the Council and the European Parliament on 25 June 2025 (see our previous coverage: A Political Breakthrough: EU reaches deal on bank resolution framework | Freshfields and EU Commission hits a snag with its proposal for a revised bank crisis management and deposit insurance framework | Freshfields).
It represents a fundamental re-balancing of the Union’s resolution framework for credit institutions and investment firms (institutions) by addressing a central shortcoming: that the current resolution framework was “seldom resorted to” and that failures of smaller and medium-sized institutions were “typically addressed through unharmonised national measures” relying on taxpayers’ money rather than industry-funded safety nets.
The key shifts are:
- Broader application: Resolution is made more accessible for smaller and medium-sized banks through a lowered public interest assessment (PIA) threshold and expanded use of deposit guarantee schemes (DGSs).
- Depositor protection: The general depositor preference is fully harmonised while retaining the highest priority ranking of covered deposits.
- Industry funding over taxpayers: The framework systematically prefers industry-funded safety nets (such as resolution financing arrangements or DGSs) over taxpayer-funded bailouts.
- Streamlined early intervention measures: Simplified triggers and consolidated powers ensure faster supervisory action.
- Stricter conditions for MREL-eligible deposits: In order to be used towards compliance with the minimum requirement for own funds and eligible liabilities (MREL), deposits must meet stricter conditions including enhanced transparency and structural requirements.
The provisions generally apply from 11 May 2028 (with Member State transposition of Directive (EU) 2026/806 by the same date), while certain provisions relating primarily to the single resolution mechanism (SRM) and the single resolution board’s (SRB’s) institutional functioning take effect from 11 June 2026.
This post summarises the key changes across the reform package’s main pillars.
1. Public Interest Assessment (PIA) — Expanded Scope
2. Early Intervention Measures — Simplified Triggers and Extended Powers
3. Depositor Priority Hierarchy — General Depositor Preference with Retained Super-Priority
4. MREL — Stricter Conditions for Deposits and New Thresholds
5. Use of DGSs in Resolution — Bridging the Gap
6. Extraordinary Public Financial Support — Precautionary Measures
While this post has focused on the two legislative acts published on 20 April 2026, the parallel amendment of the DGSD by Directive (EU) 2026/804 is an integral part of the broader reform. In particular, the revised DGSD extends the scope of deposit protection to include deposits of specific public authorities, which in turn feeds directly into the new depositor hierarchy under the amended BRRD. The interplay between the expanded DGS framework and the new resolution rules — especially the significantly enlarged role of DGS contributions in bridging the MREL gap for smaller institutions — underscores that the three instruments must be read together as a coherent package.
As institutions prepare for the (general) 11 May 2028 application date, the practical impact of these changes will depend on how resolution authorities exercise their enhanced discretion.
This article first appeared on Lexology | Source
