Searching for the spirit of reform: the first years of banking resolution in Portugal

The supervision and resolution of banks in Portugal was subject to reforms at the beginning of the previous decade. Such reforms can be attributed to three events. The first event was the nationalization and liquidation of two small banks prior to 2010, in the wake of fraudulent practices by the banks. The second event was the financial crisis and the request by Portugal of a bailout from the other EU-MS, the granting of which was made conditional upon adoption of new rules for banking regulation. The third and final event was the enactment of the Banking Union, with the setting of the SSM and, crucially, the BRRD. The way and context in which such reforms were implemented have led to national and European questions over how Portuguese authorities are complying with rules of resolution, and to judicial cases at the EU level regarding the compatibility of the EU’s regime with the Treaties. This paper describes and analyzes the reform of bank resolution in Portugal.