The global financial crisis saw several European states ‘bailing out’ banks. Consequently, bank creditors mostly escaped unscathed. This highlighted the need for a legal framework that makes it possible to impose losses on a failing bank’s creditors without disrupting the financial system. The EU’s response was the Bank Recovery and Resolution Directive (BRRD) of 2014. The directive requires Member States to adopt bank resolution frameworks, thereby partially harmonizing the diverse approaches to bank insolvency previously found in national laws. The general insolvency frameworks employed for handling most company failures are thus deemed inapt for safeguarding financial stability.

Any insolvency framework requires rules concerning creditor priority—ie how losses are to be shared among creditors. In the recently published monograph Creditor Priority in European Bank Insolvency Law (Hart Publishing 2023), Sjur Swensen Ellingsæter studies the framework for creditor priority resulting from the BRRD and other EU legal acts of relevance for bank failures, such as the Settlement Finality Directive (SFD) and the Financial Collateral Directive (FCD). This represents the first comprehensive study of EU requirements on creditor priority in bank insolvency law, here understood as comprising both the bank resolution frameworks to be used when in the public interest and the national frameworks for winding up insolvent banks whose failure does not necessitate such resolution.

On the occasion of the book’s publication, BI’s Department of Law and Governance is arranging a seminar on 3 May 2023.