When trust is not enough : Bank resolution, SPE, Ring-fencing and group support

When trust is not enough : Bank resolution, SPE, Ring-fencing and group support

Mathias Dewatripont, Marie Montigny, Gregory Nguyen

Series number :

Serial Number: 
759/2021

Date posted :

May 25 2021

Last revised :

May 25 2021
SSRN Share

Keywords

  • Bank resolution • 
  • SPE • 
  • banking crisis • 
  • bail-in • 
  • Bankruptcy

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.

Authors

Real name:
Marie Montigny
Real name:
Gregory Nguyen