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

Author

Listed:
  • Mathias Dewatripont

    (Solvay Brussels School and ECARES, Université Libre de Bruxelles)

  • Marie Montigny

    (European Coordination, NBB)

  • Gregory Nguyen

    (Resolution unit, NBB)

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.

Suggested Citation

  • Mathias Dewatripont & Marie Montigny & Gregory Nguyen, 2021. "When trust is not enough: Bank resolution, SPE, Ring-fencing and group support," Working Paper Research 403, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:202108-403
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    File URL: https://www.nbb.be/en/articles/when-trust-not-enough-bank-resolution-spe-ring-fencing-and-group-support
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    More about this item

    Keywords

    Bank resolutionSPEbanking crisisbail-inbankruptcy;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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