Table Of ContentPalgrave Macmillan Studies in Banking and Financial Institutions
Series Editor: Professor Philip Molyneux
The Palgrave Macmillan Studies in Banking and Financial Institutions are inter-
national in orientation and include studies of banking within particular coun-
tries or regions, and studies of particular themes such as Corporate Banking, Risk
Management, Mergers and Acquisition. The books’ focus is on research and prac-
tice, and they include up-to-date and innovative studies on contemporary topics
in banking that will have global impact and influence.
Titles include:
Vincenzo Formisano
NON-KNOWLEDGE RISK AND BANK-COMPANY MANAGEMENT
The Role of Intangibles in Rating Models
Bernardino Quattrociocchi
INTERNAL RATING SYSTEMS AND THE BANK-FIRM RELATIONSHIP
Valuing Company Networks
Miao Han
CENTRAL BANK REGULATION AND THE FINANCIAL CRISIS
A Comparative Analysis
Pierluigi Ciocca
STABILISING CAPITALISM
A Greater Role for Central Banks
Anabela Sérgio (editor)
BANKING IN PORTUGAL
Michele Modina
CREDIT RATING AND BANK-FIRM RELATIONSHIPS
New Models to Better Evaluate SMEs
Jes Villa
ETHICS IN BANKING
The Role of Moral Values and Judgements in Finance
Dimitrios D. Thomakos, Platon Monokroussos & Konstantinos I. Nikolopoulos
(editors)
A FINANCIAL CRISIS MANUAL
Reflections and the Road Ahead
Elena Beccalli and Federica Poli (editors)
BANK RISK, GOVERNANCE AND REGULATION
LENDING, INVESTMENTS AND THE FINANCIAL CRISIS
Domenico Siclari (editor)
ITALIAN BANKING AND FINANCIAL LAW
Supervisory Authorities and Supervision
INTERMEDIARIES AND MARKETS
Crisis Management Procedures, Sanctions, Alternative Dispute Resolution Systems
and Tax Rules
Fayaz Ahmad Lone
ISLAMIC FINANCE
Its Objectives and Achievements
Valerio Lemma
THE SHADOW BANKING SYSTEM
Creating Transparency in the Financial Markets
Imad A. Moosa
GOOD REGULATION, BAD REGULATION
Elisa Menicucci
FAIR VALUE ACCOUNTING
Key Issues Arising from the Financial Crisis
Anna Omarini
RETAIL BANKING
Business Transformation and Competitive Strategies for the Future
Palgrave Macmillan Studies in Banking and Financial Institutions
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Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke,
Hampshire RG21 6XS, England
The European Banking
Union
Supervision and Resolution
Giuseppe Boccuzzi
Director General, Interbank Deposit Protection Fund, Italy
© Giuseppe Boccuzzi 2016
Softcover reprint of the hardcover 1st edition 2016 978-1-137-55564-9
All rights reserved. No reproduction, copy or transmission of this
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Any person who does any unauthorized act in relation to this publication
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in accordance with the Copyright, Designs and Patents Act 1988.
First published 2016 by
PALGRAVE MACMILLAN
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registered in England, company number 785998, of Houndmills, Basingstoke,
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ISBN 978-1-349-57525-1 ISBN 978-1-137-55565-6 (eBook)
DOI 10.1057/9781137555656
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managed and sustained forest sources. Logging, pulping and manufacturing
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A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Boccuzzi, Giuseppe.
The European banking union : supervision and resolution / Giuseppe
Boccuzzi.
pages cm.—(Palgrave Macmillan studies in banking and
financial institutions)
Includes bibliographical references.
1. Banks and banking – State supervision – European Union countries.
2. Banking law – European Union countries. 3. Banks and banking –
European Union countries. 4. Financial crises – European Union countries –
Prevention. I. Title.
HG1778.E85B63 2015
332.1094—dc23 2015023511
Contents
List of Figures ix
Preface x
Prologue xii
Introduction 1
Some preliminary observations on the new legal framework 6
1 The Financial Crisis and the Banking Union Project 13
1 T he weakness of the institutional framework for managing
banking crises before the financial crisis 13
2 T he first timid (and difficult) attempts to regulate banking
insolvency 14
3 T he answer to the financial crisis: the Banking Union project 18
2 The First Pillar of the Banking Union: The Single Supervisory
Mechanism 23
1 The evolution of banking supervision at the European level 23
1.1 The first phase: the reform of regulation procedures
(the Lamfalussy system) and the logic of co-operation
and coordination in banking supervision 24
1.2 The second phase: strengthening international
co-operation and the creation of European
supervisory bodies (De Larosière project) 27
1.3 The point of arrival: the centralisation of supervisory
functions (the Single Supervisory Mechanism) 30
2 T he Single Supervisory Mechanism: the legal and
institutional profiles 31
2.1 T he division of responsibilities between the ECB and
national supervisory authorities 32
2.2 T he potential conflict of interest between supervisory
and monetary policy functions: the independence
and separation principles 37
2.3 R elations with the EBA 40
2.4 The organisation of shared supervision 41
2.5 The preparatory stage of the SSM 42
2.6 The role of the ECB in banking crisis management 43
v
vi Contents
3 The European Reform of the Rules for Banking Crisis
Management: The Bank Recovery and Resolution Directive 48
1 The new European rules for crisis management 48
2 The setting up of National Resolution Authorities 50
3 A significant innovative theme: the handling of cross-border
group crises: the establishment of Resolution Colleges 51
4 A new strategic approach: towards a complete and
integrated vision to deal with crisis phenomena 54
4.1 Preparatory and preventative measures 55
4.1.1 Recovery plans 56
4.1.2 Resolution plans 60
4.2 Early intervention 65
4.2.1 Definition of triggers for intervention 65
4.2.2 Choice of early intervention tools 66
4.3 Resolution 69
4.3.1 Triggers for resolution action 72
4.3.2 Powers of the resolution authority 75
4.3.3 Resolution tools 78
4.3.4 Government financial stabilisation tools 93
4.3.5 Safeguards for third parties 95
4.4 Liquidation 99
5 F inancing resolution. The establishment of the Bank
Resolution Fund (BRF) 100
5.1 Funding mechanism 101
5.2 The use of bank resolution funds 105
5.3 Intervention of deposit guarantee schemes in the
resolution 106
5.4 Recourse to the European Stability Mechanism (ESM) 107
6 A challenge for the future: the harmonisation of
insolvency regimes 110
4 The Second Pillar of the Banking Union: From the National
Resolution Authorities to the Single Resolution Mechanism 116
1 T he regulatory path towards the centralisation of crisis
management 116
2 C onferring tasks on the Single Resolution Board: the
legal basis 118
3 D ecision-making process in resolution: a fractious,
perhaps inevitable, system 119
4 The setting-up of a Single Resolution Fund 122
4.1 Financial resources and the funding mechanism of
the Single Resolution Fund 124
Contents vii
4 .2 T he Intergovernmental Agreement on transfer and
mutualisation of resources to the Single
Resolution Fund 126
4.3 C ontribution mechanism to the fund 128
4.4 R elations between the SRF and the Deposit
Guarantee Systems 129
5 The Third Pillar of the Banking Union: The Pan-European
Deposit Guarantee Scheme 130
1 The role of deposit guarantee schemes 130
2 Directive 94/19/EC 132
3 D GSD reform: from minimum to maximum harmonisation 133
3.1 T he reform process and general lines of regulatory
intervention 133
3.2 M ain aspects of the reform 135
3.2.1 Scope of guarantee, payout procedures and
timeframe 135
3.2.2 Stress testing of deposit guarantee systems 139
3.2.3 Financial means and funding mechanism
of DGSs 140
3.2.4 Use of funds 142
3.2.5 Institutional Protection Schemes 147
3.2.6 Co-operation and exchange of information
between DGSs and other authorities within
the safety net 148
3.2.7 Cross-border co-operation 149
6 Banking Crises and State Aid Discipline 154
1 State aid general rules 154
2 The special discipline for the financial sector 155
3 The 2013 Communication of the European Commission 158
3.1 T he burden-sharing principle and the need for a
bank restructuring plan 157
3.2 Recapitalisation and impaired asset measures 158
3.3 Guarantees and liquidity support 160
3.4 Intervention of Deposit Guarantee Schemes (DGSs) 161
3.5 Aid to bank liquidation 162
4 T he rationale for EU action: the growth target 163
7 Conclusions 165
1 T he implantation of the new European regulations on
banking crisis management in national legislations 165
viii Contents
2 T he identification of the resolution authority 166
3 T he scope and the use of tools: the flexibility of the
Directive and the left to Member States for
discretionary measures 168
4 T he safeguards for subjects affected by resolution
measures 171
5 D GSD implementation: national legislative choices 173
Notes 176
Bibliography 208
Index 217
List of Figures
I.1 New configuration of the safety net 6
1.1 Banking Union: three pillars and a single rulebook 20
1.2 Banking Union: the single rulebook 22
2.1 European System of Financial Supervision (ESFS) 28
2.2 Single Supervisory Mechanism 36
3.1 A uthorities in the Resolution Colleges and in the Crisis
Management Groups (CMGs) 52
3.2 New framework for bank recovery and resolution:
an integrated approach 54
3.3 Governance: the central role of the risk appetite framework 56
3.4 Recovery plans 59
3.5 Global Loss Absorbency Capacity (GLAC) – SPE and
MPE resolution 63
3.6 Resolution plans 64
3.7 Early intervention tools 69
3.8 Triggers for resolution 74
3.9 Resolution tools 79
3.10 Depositor preference 87
3.11 Exclusions from bail-in 89
3.12 Public interventions in resolution 94
3.13 National bank resolution fund: funding 104
4.1 Single Resolution Fund: the funding mechanism 125
4.2 Resolution in the EU and in the Eurozone 128
5.1 DGS mandates 131
5.2 The current Italian DGS intervention system 132
5.3 Funding of deposit guarantee schemes 142
5.4 Use of deposit guarantee schemes in the new directive 143
6.1 Forms of state aid in the 2013 communication 158
7.1 Temporary administrator and special management 169
ix
