Abstract

http://ssrn.com/abstract=1750736
 
 

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Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks


Eugenio Cerutti


International Monetary Fund (IMF)

Anna Ilyina


affiliation not provided to SSRN

Yulia Makarova


Independent

Christian Schmieder


International Monetary Fund

November 2010

IMF Working Paper No. 10/247

Abstract:     
This paper presents a stylized analysis of the effects of ring-fencing (i.e., different restrictions on cross-border transfers of excess profits and/or capital between a parent bank and its subsidiaries located in different jurisdictions) on cross-border banks. Using a sample of 25 large European banking groups with subsidiaries in Central, Eastern and Southern Europe (CESE), we analyze the impact of a CESE credit shock on the capital buffers needed by the sample banking groups under different forms of ring-fencing. Our simulations show that under stricter forms of ring-fencing, sample banking groups have substantially larger needs for capital buffers at the parent and/or subsidiary level than under less strict (or in the absence of any) ring-fencing.

Number of Pages in PDF File: 36

Keywords: Banks, Capital, Credit risk, Cross country analysis, Eastern Europe, International banking, Regional shocks

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Date posted: February 1, 2011  

Suggested Citation

Cerutti, Eugenio and Ilyina, Anna and Makarova, Yulia and Schmieder, Christian, Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks (November 2010). IMF Working Papers, Vol. , pp. 1-35, 2010. Available at SSRN: http://ssrn.com/abstract=1750736

Contact Information

Eugenio Cerutti
International Monetary Fund (IMF) ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
Anna Ilyina (Contact Author)
affiliation not provided to SSRN
No Address Available
Yulia Makarova
Independent
Christian Schmieder
International Monetary Fund ( email )
Washington DC
United States
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