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A note on the adequacy of the EU scheme for bank recovery, resolution and deposit insurance in Spain

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  • Pilar Gómez-Fernández-Aguado

    (Department of Financial Economics and Accounting, Universidad Pablo de Olavide)

  • Antonio Partal-Ureña

    (Department of Financial Economics and Accounting, Universidad Pablo de Olavide)

  • Antonio Trujillo-Ponce

    (Department of Financial Economics and Accounting, Universidad Pablo de Olavide)

Abstract

This article analyzes whether the funds set by the recent EU directives on bank resolution and deposit insurance to create a safer and sounder financial sector (that is, 1 and 0.8 per cent of covered deposits, respectively) are adequate to cover unexpected losses for the Spanish banking system. By applying a framework based on the foundation internal ratings-based approach established in Basel Capital Accords, we find that the fixed target levels proposed by the EU bank rules would not ensure the highest credit quality for a bank resolution and deposit insurance Fund in Spain. Nevertheless, these resources would be sufficient to ensure a good solvency level for the Fund, equivalent to an AA S&P rating in 2013.

Suggested Citation

  • Pilar Gómez-Fernández-Aguado & Antonio Partal-Ureña & Antonio Trujillo-Ponce, 2016. "A note on the adequacy of the EU scheme for bank recovery, resolution and deposit insurance in Spain," Journal of Banking Regulation, Palgrave Macmillan, vol. 17(4), pages 332-337, November.
    • Handle: RePEc:pal:jbkreg:v:17:y:2016:i:4:d:10.1057_jbr.2015.29
    DOI: 10.1057/jbr.2015.29
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    References listed on IDEAS

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    1. Riccardo Lisa & Stefano Zedda & Francesco Vallascas & Francesca Campolongo & Massimo Marchesi, 2011. "Modelling Deposit Insurance Scheme Losses in a Basel 2 Framework," Journal of Financial Services Research, Springer;Western Finance Association, vol. 40(3), pages 123-141, December.
    2. Lee, Shih-Cheng & Lin, Chien-Ting & Tsai, Ming-Shann, 2015. "The pricing of deposit insurance in the presence of systematic risk," Journal of Banking & Finance, Elsevier, vol. 51(C), pages 1-11.
    3. Andrew Kuritzkes & Til Schuermann & Scott Weiner, 2005. "Deposit Insurance and Risk Management of the U.S. Banking System: What is the Loss Distribution Faced by the FDIC?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 27(3), pages 217-242, September.
    4. John Raymond LaBrosse & Rodrigo Olivares-Caminal & Dalvinder Singh, 2014. "The EU bank recovery and resolution directive – Some observations on the financing arrangements," Journal of Banking Regulation, Palgrave Macmillan, vol. 15(3-4), pages 218-226, September.
    5. Episcopos, Athanasios, 2004. "The implied reserves of the Bank Insurance Fund," Journal of Banking & Finance, Elsevier, vol. 28(7), pages 1617-1635, July.
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