However, the argument sometimes made, namely, that the activation of the BRRD has been a primary cause of the recent deterioration in market sentiment, including the large losses in European bank stocks, is far-fetched. The provisions of the BRRD have been widely known since 2014.
What analysts, perhaps, failed to realize is that the new and stricter rules introduced with the BRRD will affect the volatility of the prices of banks’ shares should concerns be raised about the banks’ profitability, solvency and, most importantly, their viability.