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Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks

2010-11-01 Business & Economics
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Release : 2010-11-01
Genre : Business & Economics
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Book Rating : 473/5 ( reviews)

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Book Synopsis Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks by : Ms.Anna Ilyina

Download or read book Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks written by Ms.Anna Ilyina. This book was released on 2010-11-01. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a stylized analysis of the effects of ring-fencing (i.e., different restrictions on cross-border transfers of excess profits and/or capital between a parent bank and its subsidiaries located in different jurisdictions) on cross-border banks. Using a sample of 25 large European banking groups with subsidiaries in Central, Eastern and Southern Europe (CESE), we analyze the impact of a CESE credit shock on the capital buffers needed by the sample banking groups under different forms of ring-fencing. Our simulations show that under stricter forms of ring-fencing, sample banking groups have substantially larger needs for capital buffers at the parent and/or subsidiary level than under less strict (or in the absence of any) ring-fencing.

Ring-Fencing Cross Border Banks

2014
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Release : 2014
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Book Synopsis Ring-Fencing Cross Border Banks by : Katia D'Hulster

Download or read book Ring-Fencing Cross Border Banks written by Katia D'Hulster. This book was released on 2014. Available in PDF, EPUB and Kindle. Book excerpt: While international policy makers are making good progress on the important work of global resolution mechanism and the preparation of recovery and resolution plans, a growing number of supervisors, home as well as hosts, are resorting to territorial approaches. Higher capital ratios, dividend restrictions, restrictions on liquidity flows and even forced subsidiarisation are gaining renewed popularity. Their objective is to protect the interests of the domestic stakeholders of a foreign bank and to limit the effects of cross border contagion. This type of “ring-fencing” comes with a negative connotation as it comes at a cost for banks and the efficiency of the overall global financial system. But why do prudential supervisors ring-fence and what makes them more likely to ring-fence? And do all forms of ring-fencing really deserve this bad reputation? What are the risks these measures are addressing and which instruments have been used? Finally, what are the implications of ring-fencing for the banking group, financial stability in the home and host country, as well as global financial stability?

Ring-Fencing Cross-Border Banks

2014
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Release : 2014
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Book Synopsis Ring-Fencing Cross-Border Banks by : Katia D'Hulster

Download or read book Ring-Fencing Cross-Border Banks written by Katia D'Hulster. This book was released on 2014. Available in PDF, EPUB and Kindle. Book excerpt: Territorial bias or home bias refers to the degree of geographical separation of the local operations of a cross border banking group from its foreign parent bank or affiliates to protect the local operations from cross-border contagion. The purpose of this paper is to measure and rank territorial bias in prudential banking regulation and supervision in 22 European Union (EU) and non-EU countries with financial systems predominantly owned by foreign banks. First, a scoring system is developed to measure territorial bias on an individual country basis (vertical analysis). Second, the results are compared across two peer groups, EU and non-EU (horizontal analysis). I find that territorial bias is present to a varying degree in the prudential supervision and the regulations of the countries surveyed. On average higher territorial bias is observed in the non-EU group. Generally, there is also less dispersion in the EU, which can be explained by a more unified regulatory framework and the efforts to achieve supervisory convergence. Non-EU countries also use a wider array of instruments; typically higher capital ratios, mandatory conversion from systemic branches to subsidiaries, stricter local governance requirements, and liquidity restrictions. This is the first analysis and quantification of territorial bias in bank supervision and regulation.

Voluntary Support and Ring-fencing in Cross-border Banks

2022
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Release : 2022
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Book Synopsis Voluntary Support and Ring-fencing in Cross-border Banks by : Gyöngyi LÓRÁNTH

Download or read book Voluntary Support and Ring-fencing in Cross-border Banks written by Gyöngyi LÓRÁNTH. This book was released on 2022. Available in PDF, EPUB and Kindle. Book excerpt:

Creating a Safer Financial System

2013-05-14 Business & Economics
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Release : 2013-05-14
Genre : Business & Economics
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Book Rating : 949/5 ( reviews)

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Book Synopsis Creating a Safer Financial System by : José Vinãls

Download or read book Creating a Safer Financial System written by José Vinãls. This book was released on 2013-05-14. Available in PDF, EPUB and Kindle. Book excerpt: The U.S., the U.K., and more recently, the E.U., have proposed policy measures directly targeting complexity and business structures of banks. Unlike other, price-based reforms (e.g., Basel 3 and G-SIFI surcharges), these proposals have been developed unilaterally with material differences in scope, design and implementation schedules. This may exacerbate cross-border regulatory arbitrage and put a further burden on consolidated supervision and cross-border resolution. This paper provides an analysis of the potential implications of implementing different structural policy measures. It proposes a pragmatic and coordinated approach to development of these policies to reduce risk of regulatory arbitrage and minimize unintended consequences. In doing so, it also aims to identify a set of common policy measures that countries could adopt to re-scope bank business models and corporate structures.

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