When Trust is Not Enough: Bank Resolution, SPE, Ring-fencing and Group Support

33 Pages Posted: 24 May 2021

See all articles by Mathias Dewatripont

Mathias Dewatripont

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES); Centre for Economic Policy Research (CEPR)

Marie Montigny

affiliation not provided to SSRN

Gregory Nguyen

National Bank of Belgium - Research Department

Date Written: May 20, 2021

Abstract

This discussion paper investigates the differences existing between the Single Point of Entry and the Multiple Point of Entry resolution models and links this question to the issue of support that bank subsidiaries can expect from their parent companies both in resolution and in normal insolvency proceedings. Given that parental support remains imperfect in these two resolution models, the paper concludes that existing safeguards aiming at preserving the corporate interests of subsidiaries remain needed and justified. The paper then identifies potential avenues that could be further explored to reinforce the support model and thereby reduce incentives to adopt ring-fencing measures.

Keywords: Bank resolution, SPE, Banking crisis, bail-in, bankruptcy

JEL Classification: G10, G21, G28, K22

Suggested Citation

Dewatripont, Mathias and Montigny, Marie and Nguyen, Gregory, When Trust is Not Enough: Bank Resolution, SPE, Ring-fencing and Group Support (May 20, 2021). European Corporate Governance Institute – Finance Working Paper No. 759/2021, Available at SSRN: https://ssrn.com/abstract=3850103 or http://dx.doi.org/10.2139/ssrn.3850103

Mathias Dewatripont (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium
+32 2 650 4217/4 (Phone)
+32 2 650 4475 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Marie Montigny

affiliation not provided to SSRN

Gregory Nguyen

National Bank of Belgium - Research Department ( email )

Resolution Unit
Boulevard de Berlaimont 14
B-1000 Brussels, 1000
Belgium

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