The Impact of Banking Resolution Mechanisms on Shareholders’ rights

The EU's BRRD and SRMR frameworks were introduced to manage failing banks without destabilizing financial systems or burdening taxpayers. By prioritizing bail-ins over bailouts, they ensure losses are absorbed by shareholders and creditors, often at the expense of shareholder rights. Safeguards like the No Creditor Worse Off principle and proportionality aim to balance public interest and fairness, but challenges remain in implementation. As cases like Banco Popular Español highlight, navigating the tension between stability and shareholder protections is key to the system’s success.