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Survey of Resolution and Restructuring in Europe: Pre- and Post-BRRD

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Abstract

This paper surveys 19 case studies of bank resolutions and restructurings across 15 Key Design Decisions. It focuses on interventions that occurred in Europe both in the years leading up to the adoption of the Bank Recovery and Resolution Directive (BRRD) in 2014 (when many jurisdictions were constrained by a lack of legal authority) and in the years after the BRRD was in place. The main themes that emerge are: (a) the need for resolution and restructuring to eliminate uncertainty about an institution's solvency by closing it, recapitalizing it, or merging it with a healthier institution; (b) the importance of effective valuation in achieving this result; (c) the necessity of clarity in the treatment of creditors; and (d) the value of a credible bail-in tool to incentivize creditors to agree to solutions outside of resolution.

Suggested Citation

  • McNamara, Christian & Mott, Carey & Gupta, Salil & Feldberg, Greg & Metrick, Andrew, 2024. "Survey of Resolution and Restructuring in Europe: Pre- and Post-BRRD," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 6(1), pages 1-34, March.
    • Handle: RePEc:ysm:ypfsfc:v:6:y:2024:i:1:p:1-34
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1529&context=journal-of-financial-crises
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    References listed on IDEAS

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    1. Metrick, Andrew, 2019. "The Lehman Brothers Bankruptcy G: The Special Case of Derivatives," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 1(1), pages 151-171, March.
    2. Nicholas S. Coleman & Andromachi Georgosouli & Tara N. Rice, 2018. "Measuring the Implementation of the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions in the European Union," International Finance Discussion Papers 1238, Board of Governors of the Federal Reserve System (U.S.).
    3. International Association of Deposit Insurers, 2014. "IADI Core Principles for Effective Deposit Insurance Systems," IADI Standards 14-11, International Association of Deposit Insurers.
    4. Ryan Defina, 2021. "Banking Resolution: Expansion of the Resolution Toolkit and the Changing Role of Deposit Insurers," IADI Policy Briefs 3, International Association of Deposit Insurers.
    5. Metrick, Andrew, 2019. "The Lehman Brothers Bankruptcy H: The Global Contagion," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 1(1), pages 172-199, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    bankruptcy; resolution; restructuring;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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