Resolution of Cross-Border Banking Groups
Matthias Haentjens & Bob Wessels (eds.), Research Handbook on Crisis Management in the Banking Sector, Edward Elgar Publishing Ltd, Cheltenham, UK, 2015, Forthcoming
35 Pages Posted: 6 Dec 2014
Date Written: December 4, 2014
This chapter examines the prospects for effective cross-border resolution of failing systemically important banks. It begins by recalling the prevalence of national interests when cross-border banks were resolved in the financial crisis. It notes that in some cases foreign creditors benefitted from nationally-driven action, even if sometimes they did not. However, it concludes that the positive externalities from nationally motivated action are likely to be lower in the future because of the likely lower incidence of bail-outs. It then turns to the prospects of cross-border cooperation both in the case of single point of entry (SPE) and multiple point of entry (MPE) resolutions. It argues that cross-border cooperation will be important to maximise value to creditors in both cases, obviously in the case of MPE but also to an extent that is sometimes not recognised in the case of SPE. Finally, it turns to an assessment of how likely it is that cross-border cooperation will emerge (a) under the FSB Key Attributes and (b) within the European Union, dealing with both the Banking Union and the EU as a whole.
Keywords: banking groups, resolution, cross-border cooperation, FSB, Banking Union
JEL Classification: F36, G18, G21, G33, K22, K33
Suggested Citation: Suggested Citation