Published: 17.11.2022 Updated: 05.07.2024

The Single Resolution Mechanism is one of the three pillars of the stability of the banking system in the European Union. It ensures a common approach to the recovery and resolution of failing banks and investment firms in the euro area.

Latvia, as a member of the euro area, is also a member of the Single Resolution Mechanism. The resolution mechanism applies to all credit institutions (banks) registered in Latvia and those investment firms*which meet the requirements of Section 6, Paragraph one, Clause 1 or 2 of the Law on Investment Firms
with initial capital of at least 750 000 euro.


The objectives of the Single Resolution Mechanism are:

  • to define a harmonised approach and common resolution tools across the European Union to address the consequences of financial crises in a timely manner;
  • to safeguard the financial stability of banks and investment firms and ensure the continuity of their critical functions;
  • to significantly minimise the possibility of losses to taxpayers by establishing that the costs of rescuing a bank or an investment firm important to the financial sector and national economy are covered by their shareholders and creditors;
  • to establish an effective resolution mechanism for cross-border groups.

Latvijas Banka – the national resolution authority

The effective and coherent functioning of the Single Resolution Mechanism is ensured by the Single Resolution Board, a body of the European Union, which, in cooperation with the resolution authorities of the participating Member States, implements the Single Resolution Mechanism on a centralised basis.

Latvijas Banka is the resolution authority in Latvia. Latvijas Banka cooperates with the Single Resolution Board in resolution processes and implements the decisions made by the Single Resolution Board.

The Single Resolution Board carries out its tasks and exercises its rights in relation to those banks of Latvia which are subject to the direct supervision of the European Central Bank under the Single Supervisory Mechanism, as well as to cross-border groups.

Currently in Latvia, the Single Resolution Board is directly responsible for the resolution function of largest banks, i.e. "Swedbank" AS, AS "SEB banka" and Joint Stock Company "Citadele banka". At the same time, Latvijas Banka is responsible for applying (or not applying) resolution measures to other banks and investment firms in Latvia.