Proportionality in Crisis Prevention and Resolution Planning: Institutional Protection Schemes and Banking

This article examines the role of proportionality in crisis prevention and resolution planning within the EU banking framework, with a particular focus on institutional protection schemes (IPSs) and banking groups. Although IPSs and banking groups represent different legal and organizational forms of networked financial institutions, EU prudential and resolution law continues to treat them asymmetrically, often granting preferential regulatory treatment to IPSs. The contribution critically assesses whether such differentiation remains justified in light of the principle of proportionality, especially in the context of recovery and resolution planning, public interest assessments, and the calibration of MREL requirements. By analysing the EU regulatory framework, supervisory and resolution practices, and recent case law, the article highlights methodological challenges stemming from forward-looking and scenario-based assessments under conditions of structural uncertainty. It argues that proportionality in this domain should not be understood merely as moderation of regulatory burdens, but also as consistency across the supervision–resolution continuum, ensuring coherent treatment of similar risk profiles regardless of organizational form. The article concludes by identifying the need for further harmonisation and a more network-sensitive approach to EU banking regulation, particularly in cross-border contexts.