Resolution

In accordance with the Law on the National Bank of the Republic of North Macedonia, the National Bank is responsible for conducting preparatory activities for bank resolution, initiating a bank resolution procedure and applying bank resolution tools and powers. The Executive Board of the National Bank decides on initiating a bank resolution procedure and applying bank resolution tools and powers, in accordance with the law.

Bank Resolution Law is adopted in accordance with the European Directive 2014/59/EU for establishing a framework for the recovery and resolution of credit institutions. The Law stipulates the bank resolution framework, which together with the supervision and early intervention measures, the deposit insurance scheme and the role of the central bank for ensuring emergency liquidity assistance, represents the four pillars of the so-called financial safety net.

Bank resolution is carried out for the purposes of:

− ensuring continuity in bank’s critical functions; 

− avoiding a significant adverse impact on the financial system stability;

− protecting public funds by minimizing the possibility of using any extraordinary public financial support;

− protecting depositors whose deposits are covered; 

− protecting funds and other assets of bank’s clients.

Resolution rules and procedures according to this Law apply only to those banks for which the existence of public interest has been determined, i.e. which, due to their size, systemic importance, as well as the critical functions they perform, have a significant impact on financial stability and the real sector. By rule, the bank resolution is in the public interest, if it is a systemically important bank. Banks that do not perform critical functions and for which it would be assessed that their termination of operations would not cause significant negative consequences for financial stability, will not be subject to resolution according to this Law, but are subject to bankruptcy proceedings that would be conducted in accordance with the Banking Law and the Bankruptcy Law. 

The main principles in the Bank Resolution Law are that the bank’s losses should be borne first by bank's shareholders and then by other creditors thereof, in a reverse order from the order of priority of claims in a bank bankruptcy proceeding, whereby no creditor should incur greater losses than would have been incurred if the bank had been wound up under bankruptcy proceeding.