Czech National Bank publishes simplified bail-in implementation process

Given the structure of the Czech banking sector, bail-in is the preferred resolution strategy for institutions managing an absolute majority of the banking assets in the Czech Republic.

In order to enhance the transparency and predictability of the bail-in implementation process so that it can effectively achieve the resolution objectives set out in Article 75 of Act No. 374/2015 Coll., on Recovery and Resolution in the Financial Market, the CNB has published a simplified description of the steps it expects to be taken in the event of application of the bail-in tool.

When preparing this simplified process, the CNB mainly relied on the applicable legal framework in the Czech Republic and the relevant principles issued by the Financial Stability Board. It worked in close cooperation with the Central Securities Depository Prague and the Prague Stock Exchange and subsequently consulted internally with the CNB’s organisational units supervising and overseeing these financial market infrastructures (FMIs).

The proposed bail-in implementation process makes maximum use of the existing procedures, technologies and conventions of the above-mentioned FMIs.