To Ring-Fence or Not, and How? Strategic Questions for Post-Crisis Banking Reform in Europe

Binder, Jens-Hinrich

doi:10.2139/ssrn.2543860

Cited by 5 publications

(3 citation statements)

References 5 publications

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“…This risk is hard to address by any structural reform. The separate entity as a member of the group will still have reputational links with the rest of the banking group (Binder, 2014).…”

Section: Functional Analysis Of the Resulting Corporate Governance Structuresmentioning

confidence: 99%

“…Therefore, the structural banking reforms following the financial crisis share the same regulatory objective, namely, financial stability. The reforms are intended to solve these problems summed up as “too systemically important to fail” by introducing a functional separation, which isolates certain risky investment banking activities from other banking businesses, particularly from those banking activities that are essential for the real economy (Armour et al , 2016; Binder, 2014; Carr, 2015; Kern, 2015; Lui, 2012; Proctor, 2015; Schwarcz, 2013). Structural banking reforms are supposed to reduce the likelihood of bank failures by reducing the channels of contagion between the two banking businesses and by reducing complexity they are expected to enhance banking supervision.…”

Section: Structural Banking Reformsmentioning

confidence: 99%

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Structural banking reforms and their implications for banks’ corporate governance

Hellstern

2019

JFRC

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Purpose The purpose of this paper is to examine from a comparative perspective, the impact of structural banking reforms on the legal frameworks for the corporate governance of credit institutions. Design/methodology/approach This facilitates a functional analysis of the resulting corporate governance structures, which in turn provides the basis for an analysis of conceptual concerns with regard to the independence of the separate entity. Findings The paper points out that structural banking reforms come with significant implications for existing corporate governance structures of credit institutions. The resulting corporate governance structures rise conceptual concerns with regard to both the effectiveness of the independence of the separate entity and the objectives of structural banking reforms generally. Practical implications The paper shows that the implementation of structural banking reforms is a complex operational issue and process for the banking groups and the regulators. The challenge will be to establish and upheld the ring fence in a way to lower the risk of intra-group contagion. There is a great need for regulatory and supervisory policies that reinforce the settled ring fence obligations. Originality/value This paper’s value lies in providing analysis of the implications of structural banking reforms for the corporate governance of credit institutions. The relevant statutory frameworks as such set only the core components of the new structure. Defining and implementing the design is left to the discretion of the regulators.

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“…This risk is hard to address by any structural reform. The separate entity as a member of the group will still have reputational links with the rest of the banking group (Binder, 2014).…”

Section: Functional Analysis Of the Resulting Corporate Governance Structuresmentioning

confidence: 99%

Section: Structural Banking Reformsmentioning

confidence: 99%

Structural banking reforms and their implications for banks’ corporate governance

Hellstern

2019

JFRC

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“…Hence, those governments who feared that constraint sought a banking union that would enable a mutualisation of the losses. Those on the other hand that saw themselves as being on the paying rather than the receiving end of the arrangement, principally Germany, argued strongly for both limited mutualisation and strong preconditions -that all the banks were properly capitalised before the process started (Howarth and Quaglia 2013;2014Schäfer 2016). The BRRD/SRR was supposed to make the chance of using public funds at all as small as possible.…”

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confidence: 99%

Banking union: the disadvantages of opportunism

Mayes

2017

Journal of Economic Policy Reform

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The EU's approach to what it describes as "banking union" is not what one would design with a clean slate. It reflects the political constraints and the path of history. This paper compares the institutional and operational structure of "banking union" that has been decided upon with a complete structure. It focuses on the distortions caused by a system based on the euro area, which excludes Europe's most important financial market. It considers the difficulties posed for the Single Resolution arrangements and the European Deposit Insurance System by the continuing problem of the relation between weak banks and over-indebted sovereigns.

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Definition and Evolution up to the Creation of the Banking Union

Gortsos

2023

The European Banking Regulation Handbook, Volume I

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To Ring-Fence or Not, and How? Strategic Questions for Post-Crisis Banking Reform in Europe

Cited by 5 publications

References 5 publications

Structural banking reforms and their implications for banks’ corporate governance

Structural banking reforms and their implications for banks’ corporate governance

Banking union: the disadvantages of opportunism

Definition and Evolution up to the Creation of the Banking Union

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