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Comments by Eva Hüpkes London, 19 January 2009

Bankruptcy and reorganisation procedures for cross-border banks in the EU Gillian Garcia, Rosa Lastra and Maria Nieto. Comments by Eva Hüpkes London, 19 January 2009. Introduction. Very rich paper Based on comprehensive research on the supervisory and bank resolution frameworks in the EU

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Comments by Eva Hüpkes London, 19 January 2009

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  1. Bankruptcy and reorganisation procedures for cross-border banks in the EUGillian Garcia, Rosa Lastra and Maria Nieto Comments by Eva Hüpkes London, 19 January 2009

  2. Introduction • Very rich paper • Based on comprehensive research on the supervisory and bank resolution frameworks in the EU • Takes a holistic approach and proposes a broad reform agenda Comments on Garcia, Lastra, Nieto

  3. The issue • Misalignment of the operation, supervision and resolution of internationally active financial institutions • International banks are global • Supervision is sectoral • Resolution is entity-centric and national Comments on Garcia, Lastra, Nieto

  4. The challenges • The first step in any resolution is an asset grab • Focus on domestic objectives hinders coordinated solutions • Market-based resolutions are not always possible • Public assistance will be provided on a national level Comments on Garcia, Lastra, Nieto

  5. Solutions for the EU? • Align the powers of the supervisory and resolution authorities for financial groups? • Place greater reliance on home authority/supervisory colleges? • Create a pan-European deposit insurance fund (EDIC) – a first step toward an EU supervisor? Comments on Garcia, Lastra, Nieto

  6. Solutions internationally? • Safeguard critical functions (payments and settlement functions) • Strengthen national safeguards (e.g., more restricted branching, asset maintenance) • Work with key authorities toward pre-arranged firm-specific solutions Comments on Garcia, Lastra, Nieto

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