The EU Bank Recovery and Resolution Directive (BRRD) aims to harmonise Member States' resolution frameworks for banks and investment firms. The BRRD was adopted in June 2014 with a national implementation deadline of January 2015 (other than bail-in provisions, for which Member States were able to defer implementation until January 2016, although some Member States, including the UK, implemented the bail-in provisions along with the rest of the Directive in January 2015).

In June 2019, a Directive amending BRRD (BRRD2) was published in the Official Journal. BRRD2 introduced a range of reforms of the BRRD, including changes relating to resolution authorities' moratoria powers, contractual recognition of bail-in and proposed amendments to the rules on minimum requirements for own funds and eligible liabilities (MREL) to bring these in line with the Financial Stability Board's (FSB) total loss absorbing capacity (TLAC) standard.

In April 2026, a CMDI legislative package was published in the Official Journal comprising of: 

• Directive (EU) 2026/806, which amends the Bank Recovery and Resolution Directive (BRRD) as regards early intervention measures, conditions for resolution and financing of resolution action (BRRD3)
• Regulation (EU) 2026/808, which amends the Single Resolution Mechanism (SRM) Regulation as regards early intervention measures, conditions for resolution and funding of resolution action (SRMR3)
• Directive (EU) 2026/804, which amends the Deposit Guarantee Schemes Directive (DGSD) as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border co-operation, and transparency (DGSD2)

All three will enter into force on 10 May 2026 and apply from 11 May 2028. See the briefing New EU rules on bank crisis management and deposit insurance (Part 1) for further information.

Key features of the BRRD

Scope

• EU banks
• Qualifying EU investment firms
• EU holding companies of EU banks and qualifying EU investment firms
• EU financial institution subsidiaries of the above
• EU branches of non-EU banks and investment firms

Crisis prevention

• Individual institutions and groups required to prepare recovery plans and to take steps to improve resolvability
• Resolution authorities to prepare resolution plans and to conduct resolvability assessments of institutions

Early intervention

• Powers for regulators to intervene pre-resolution to require institutions to take remedial steps (e.g. change management, restructure debt, effect legal and operational changes) to avert need for resolution

Crisis management – resolution

• Regulatory intervention threshold that permits resolution action before balance sheet or cash flow insolvency
• Key resolution tools: sale of business, bridge institution, asset separation and bail-in
• Main resolution objectives: protect financial stability, preserve critical functions, avoid taxpayer losses
• Key resolution principles: losses fall in line with ordinary insolvency hierarchy (shareholders and junior debt bear losses first)
• Measures for resolving groups and third country entities

Resolution financing

• National resolution funds, financed via ex ante industry contributions
• Limits on use of resolution funds to absorb losses
• Depositor preference reduces risk to Deposit Guarantee Scheme
• 'No creditor worse off' principle limits application of resolution tools ex ante and sets ex post benchmark for creditor compensation