October 19, 2010
This story about cross-border bank insolvencies was published by EurActiv on 19th October 2010.
Failing cross-border banks might see themselves under the thumb of pan-European resolution authorities, if an EU proposal on crisis management, due for publication tomorrow (20 October), becomes a reality.
European Union policymakers want large cross-border banks to comply with EU rules on how to wind down their operations.
The move represents the EU’s latest attempt to isolate the kind of contagion caused by failing banks during the 2008 financial crisis.
Dedicated EU “resolution colleges” of supervisors and special advisers will form part of the policy, which is part of a wider G20 plan to tackle banks that are “too big to fail”.
The G20’s finance ministers and central bank governors meeting in Gyeongju, Korea, this week will discuss a similar global proposal for “bank bail-ins” whereby bondholders would have to live with a quick and less valuable conversion of their debt into equity in order to stabilise a bank’s capital base.
Regulators and analysts have already cast doubts on such plans and more widely on the EU’s involvement in bank failures.
Industry sources underline that regulators will have a hard time pinpointing which banks are in trouble in the first instance.
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