Bank Resolution and 'Bail-In' in the EU
In the aftermath of the 2007/08 financial crisis, and lacking sufficient coordinated guidelines or legislation, measures to address failing financial institutions in European Union (EU) Member States were taken at national level. In an effort to improve cross border coordination as well as to reduce future dependence on public money, the European framework for managing the failure of financial institutions was reformed, building upon the financial stability Board’s key attributes. From January 1, 2015, all EU Member States were required to transpose the Bank Recovery and Resolution Directive (BRRD) into their national law. A key element of the new powers is the bail-in tool, requiring banks to recapitalize and absorb losses from within, which was made mandatory as of January 1, 2016. These case studies have been selected as examples of how some EU countries tackled the resolution of several failing European banks. The focus of the case studies is on the application of bail-in features, i.e. statutory private loss absorption outside liquidation. Most cases studies also describe other measures used to deal with distressed financial institutions, including but not limited to government guarantees, capital injections, liquidity supports, and the creation of asset management vehicles to put the bail-in into perspective. The authors hope that, nevertheless, these real life examples of European banks’ resolutions provide a useful and interesting source of reference. For more details on resolution under the BRRD, the authors invite the readers to refer to the FinSAC Guidebook Understanding Bank Recovery and Resolution in the EU: a Guidebook to the BRRD.
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| Format: | Working Paper biblioteca |
| Language: | English en_US |
| Published: |
World Bank, Vienna
2016-12-12
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| Subjects: | bank crisis resolution, asset management, bail-in, bridge bank, recapitalization, nationalization, |
| Online Access: | http://documents.worldbank.org/curated/en/731351485375133455/Bank-resolution-and-bail-in-in-the-EU-selected-case-studies-pre-and-post-BRRD https://hdl.handle.net/10986/25975 |
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| Summary: | In the aftermath of the 2007/08
financial crisis, and lacking sufficient coordinated
guidelines or legislation, measures to address failing
financial institutions in European Union (EU) Member States
were taken at national level. In an effort to improve cross
border coordination as well as to reduce future dependence
on public money, the European framework for managing the
failure of financial institutions was reformed, building
upon the financial stability Board’s key attributes. From
January 1, 2015, all EU Member States were required to
transpose the Bank Recovery and Resolution Directive (BRRD)
into their national law. A key element of the new powers is
the bail-in tool, requiring banks to recapitalize and absorb
losses from within, which was made mandatory as of January
1, 2016. These case studies have been selected as examples
of how some EU countries tackled the resolution of several
failing European banks. The focus of the case studies is on
the application of bail-in features, i.e. statutory private
loss absorption outside liquidation. Most cases studies also
describe other measures used to deal with distressed
financial institutions, including but not limited to
government guarantees, capital injections, liquidity
supports, and the creation of asset management vehicles to
put the bail-in into perspective. The authors hope that,
nevertheless, these real life examples of European banks’
resolutions provide a useful and interesting source of
reference. For more details on resolution under the BRRD,
the authors invite the readers to refer to the FinSAC
Guidebook Understanding Bank Recovery and Resolution in the
EU: a Guidebook to the BRRD. |
|---|