Contingent Capital in European Union Bank Restructuring
73 Pages Posted: 16 May 2012 Last revised: 18 Mar 2013
Date Written: 2012
The uncoordinated reorganization and resolution of Systemically Important Financial Institutions in different countries pose many challenges. Contingent capital provides a viable alternative for the efficient restructuring and resolution of failing financial institutions. Contingent Capital provides a mechanism for internalizing banks’ failure costs and helps return distressed financial institutions to solvency. This article offers a comparative perspective on bank resolution and restructuring in the European Union, Switzerland, the United Kingdom and Germany and shows that Contingent Capital could play a substantial role in bank restructuring.
Keywords: contingent capital, financial institutions, banking, bank restructuring, corporate finance, corporate governance
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