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Cross‐border coordination of bank resolution in the EU: All problems resolved?

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  • Binder Jens-Hinrich

    (Professor of Law, Chair of Private Law and Commercial Law, Eberhard-Karls-Universitaet, Tuebingen, Germany; E-mail: binder@jura.uni-tuebingen.de. The paper has been prepared for the Symposium “Multinational Banking: Capturing the Benefits and Avoiding the Pitfalls”, held at Queen Mary and Westfield University of London, on 9 and 10 September 2015. The author gratefully acknowledges the invitation to contribute this event, and would like to thank, in particular, Christos Hadjiemmanuil for insightful comments. The findings developed herein have since been presented at seminars at the London School of Economics and Political Science, the University of Verona, a staff training seminar at the European Court of Auditors, as well as the Third Annual Banking Union Conference 2016 organised jointly by the Institute for Law and Finance at Goethe University, Frankfurt, and law firm Freshfields Bruckhaus Deringer. The paper much benefited from further valuable input gained throughout, as well as from valuable comments by two unnamed referees. The usual disclaimer applies.Germany)

Abstract

Among the many technical challenges that continue to have an impact on the effective resolution of large, complex, internationally active banking institutions and groups, the cross-border coordination of measures taken in different jurisdictions clearly is one of the most difficult to address. Given complex – and usually conflicting – vested national interests in home and host jurisdictions, cooperation requires not just a robust decision-making infrastructure, but also depends on the predictability of the economic outcomes of resolution – and on the fairness and reliability of ex ante commitments to joint burden-sharing. Given the dimension of these preconditions, it is hardly surprising that some jurisdictions, including, notably, the USA, have opted for ‘isolationist’, unilateral resolution actions vis-à-vis foreign-owned banks instead. The present article critically evaluates the new framework for cross-border bank resolution under the European Bank Recovery and Resolution Directive and the Single Resolution Mechanism as a counter-example, and identifies residual shortcomings in this regard.

Suggested Citation

  • Binder Jens-Hinrich, 2016. "Cross‐border coordination of bank resolution in the EU: All problems resolved?," European Company and Financial Law Review, De Gruyter, vol. 13(4), pages 575-598, December.
    • Handle: RePEc:bpj:eucflr:v:13:y:2016:i:4:p:575-598:n:2
    DOI: 10.1515/ecfr-2016-5006
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