|Daniel Futej||Cyril Hric|
According to the Act, the Resolution Council (Rada pre riešenie krízových situácií – the Council) was established on January 1 2015 as the national resolution authority in the Slovak Republic. The institutions that fall within the competence of the Council are credit institutions and investment companies with share capital of at least €730,000. The Council is part of the Single Resolution Mechanism (SRM), which comprises: (i) the Single Resolution Board, based in Brussels; (ii) the national resolution authorities of the euro area countries; (iii) the national resolution authorities of those other EU member states that have opted to participate in the SRM.
The main objective of the Council is to prevent the failure of institutions and groups in the financial sector and to ensure their effective resolution (if failure cannot be avoided), through the protection of financial stability and client assets. In this respect, the main tasks of the Council are: to draw up resolution plans for institutions incorporated in Slovakia and to contribute to the drafting of resolution plans for groups that have a subsidiary incorporated in Slovakia; to comment on recovery plans of those institutions or groups; to assess the resolvability of institutions; to set minimum requirements for own funds and eligible liabilities for individual institutions incorporated in Slovakia; to set the amount of financial contributions to the national resolution fund paid by individual institutions incorporated in Slovakia; to issue decisions under specific regulations in relation to institutions incorporated in Slovakia; and, to perform other activities relating to its participation in the SRM.
If National Bank Slovakia informs the Council that a particular institution is failing or is likely to fail in the near future, the Council will assess whether the conditions for resolution proceedings are met.
Resolution proceedings will then take place in the public interest, to the necessary extent and in a reasonable scope, if the objectives of the Act cannot be attained through insolvency or similar proceedings. The most weighty measure in resolution proceedings is the Council's power to intervene in the rights of shareholders and creditors. As a rule, the shareholders of the failing institution should bear losses first, and no creditor should incur greater losses in resolution proceedings than it would have incurred under insolvency proceedings according to the Bankruptcy Act. In practical terms, the exercise of some of the Council's powers may result in a relatively invasive disturbance of the rights of private parties, which in Slovak law may raise a host of issues regarding application.
Daniel Futej and Cyril Hric