Important agreement to strengthen banks and protecting deposit against future crises The EU Council and the European Parliament ended on Tuesday, June 25, 2025.
At the heart of the new Crisis Management and Deposit Insurance (CMDI) framework is the maintenance of total protection of deposits in banks up to 100,000 euros, as well as the import of explicit hierarchy in favor of small depositors and media in the event of a banking crisis.
This is the first serious reform of the bank resolution regulatory framework since the 2010 debt crisis and banking collapses, with the aim of avoiding panic phenomena and limiting the need to use public money for bank rescue that paves the way.
The Agreement holds the threshold of 100,000 euros per depositor and per bank, which is fully covered by national deposit warranty systems (in Greece is TEKE). The innovation of the agreement lies in the fact that a second level of protection for household and small and medium -sized businesses is now explicitly established by TEKE (eg over 100,000 euros).
This means that in the event of a bankruptcy of banking or bankruptcy, small and private depositors will be hierarchically preceded by other creditors, such as bondholders, investors, large companies or other financial institutions.
The example of Cyprus
So far, the European framework has stipulated that deposits up to 100,000 euros are fully guaranteed. However, in several cases of small or medium -sized banks, the authorities preferred to lead them to bankruptcy and not to consolidation, considering that the “public interest” were not served. This led to slow procedures, delayed depository payments and damage to the local economy.
At the same time, non -covered deposits (over 100,000 euros) were generally considered equal to other creditors – without differentiation between small businesses and institutional investors.
The experience of Cyprus in 2013, when a haircut of more than 100,000 euros was imposed on the Laiki Bank and the Bank of Cyprus, was catalytic for the formation of the current European approach. At that time, while the microwaves were rescued, the absence of a clear hierarchy and guarantees resulted in social and political shock, but also a severe blow to the confidence in the banking system.
In Greece, cases of bank mergers or licenses in small cooperatives (eg Achaic, Lamia) had previously led to compensation through TEKE – but with delay and lack of clarity for the priority of larger deposits of small businesses.
The new framework aspires to prevent such situations by ensuring prevention and smooth transition tools (eg asset transfer, mergers, use of resolution funds).
Reform with strict guarantees
It should be noted that the new European Agreement does not negate the principle of self -financing, that is, the Bank’s equity and liabilities (MREL) are first used, and only if this is not sufficient, are the resolution or deposit funds being activated. There are strong guarantees to prevent abuse of public or insured resources, limiting the risk.
The aim of the new architecture is also to be able to fill the famous GAP-the financial gap that can occur when rescuing a bank that does not have enough funds that can be used through the bail-in mechanism.
The June 2025 political agreement must now receive the final approval from the European Parliament and the Council to turn into legislation. However, the agreement is considered a station for the banking union as it reinforces the single market and reduces the risk of the EU banking map split into “strong” and “weak” states.