Between 2008 and 2012, the Member States of the European Union spent more than 550 billion euros of public money to help the banking sector overcome the crisis. Since then, the EU institutions - from the European Commission to the Central Bank, including the Banking Authority - have been striving to reach a consensus on a regulatory framework for the Old Continent that would reduce the need for public aid to recapitalize banks in the event of a new crisis. The Master's Degree in Banking and Financial Regulation of the University of Navarra has organized the workshop 'Recovery and Resolution Plans' as a forum for discussion between regulators, supervisors, banks, consultancy service and academia.

"It is a fundamental change in the banking business," explains Alvaro Benzo, of PwC's Financial Regulation Unit, who remarks that the new rules and regulations "raises the requirements for loss absorption," and establishes that even the largest institutions - the so-called systemic ones - "must be able to resolve themselves, that is, go bankrupt in an orderly manner."

During the meeting, which took place at the Campus BBVA in Madrid, experts such as Mark Adams, from the European Banking Authority; Raluca Painter and Miguel Ángel Otero, both from the European Commission; and Sonsoles Eirea, from the Bank of Spain, shared their knowledge. The financial institutions were represented by Santiago Fernández de Lis (BBVA) and Mark Venus (BNP Paribas).Mario Delgado, from the Fund for Orderly Bank Restructuring (FROB), also presented an e-mail to discussion paper .

All agreed agreement that the last financial crisis and the Bank Restructuring and Resolution Directive have changed the 'too big to fail' paradigm for banks considered systemic. During the crisis, the financial institutions that had to be bailed out caused "serious problems for their countries' economies causing a sovereign debt crisis," explains Germán López Espinosa, director of the program Master's Degree. Today, the Bank Recovery and Resolution Directive has established different tools to minimize the use of public money duringperiodsof financial turbulence.

From 'too big to fail' to orderly bankruptcy

Thus, " Restructuring Plans are the responsibility of financial institutions, and they must be able to identify a crisis as soon as possible through real-time indicators. They must also develop Structures of governance and monitoring of data fast and effective to recover the viability of the financial institution", emphasizes López-Espinosa.

Bank resolution plans are prepared by the relevant bank resolution authorities. However, they should be tailored to the specific circumstances and needs of each financial institution. Bank resolution authorities will determine the most appropriate strategy, considering the bank's financial and organizational Structures and its loss absorbing capacity.