Publication: Proposal for a Single Framework for [sm]All Bank Resolution in FinSAC Client Countries
Loading...
Date
2025-06-09
ISSN
Published
2025-06-09
Author(s)
Editor(s)
Abstract
This Policy Note advocates for the introduction of a single resolution framework applicable to failing banks of all sizes in FinSAC client countries. As most FinSAC client countries already have, or are in the process of developing, a European Union (EU) aligned bank resolution framework, the starting point for the analysis is the EU Bank Recovery and Resolution Directive (BRRD). While the single regime and recommendations proposed in this Note are in principle generic, they are tailored to the specificities of financial markets in FinSAC client countries, characterized by small and largely deposit-funded banking systems.
Link to Data Set
Citation
“World Bank. 2025. Proposal for a Single Framework for [sm]All Bank Resolution in FinSAC Client Countries. © World Bank. http://hdl.handle.net/10986/43313 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Citations
Collections
Related items
Showing items related by metadata.
Publication Strengthening Safeguards in Bank Resolution Frameworks in Emerging and Developing Countries(World Bank, Washington, DC, 2020-05-05)The paper will focus on the resolution frameworks of a sample of 12 countries taken from 6 regions. The review of the sample countries is used to analyze issues that may be relevant for other countries and to discuss potential challenges faced in implementing effective safeguards. The remainder of the paper is organized as follows: Section two discusses the rationale for significant powers given to the resolution authority under the key attributes and the far-reaching implications of these powers. Section three offers a brief overview of the safeguards that are incorporated in the key attributes, describes the rationale and intent of each safeguard and how to implement them to support an efficient bank resolution framework. Section four reviews the observed features of safeguards of current resolution regimes in 11 emerging and developing countries, and one country that developed into an advanced economy, to identify potential areas where implementing effective safeguards may require significant changes in various aspects of the local jurisprudence. Building upon the observations made in section four, section five aims to provide guidance for designing sound safeguards in bank resolution frameworks of emerging and developing countries. The paper ends with a section highlighting the key take-aways. This paper is a research note reflecting the authors’ review work and experiences and does not reflect in any way the views of the World Bank or IMF or their management or Boards.Publication Using the FSB Key Attributes to Design Bank Resolution Frameworks for Non-FSB Members(World Bank, Washington, DC, 2020-06-03)This paper discusses how the Key Attributes could be implemented proportionally in non-FSB member jurisdictions in light of the structure and complexity of the banking sectors and the capacity of the authorities in those countries. The focus of this paper is on resolution regimes for banks, as banks are likely to be the main source of systemic risk in most non-FSB member countries.Publication Financial Sector Assessment Program - Albania : Core Principles for Effective Deposit Insurance Systems(World Bank, Washington, DC, 2014-02)This assessment of compliance with the core principles for effective deposit insurance systems (core principles) was conducted as a part of the Financial Sector Assessment Program (FSAP) performed by the International Monetary Fund and the World Bank at the request of the Albanian government. This assessment was conducted by Claire McGuire, Senior Financial Sector Specialist with the World Bank, during a mission to Albania from October 28th to November 11th, 2013. The assessment was based on a review of relevant laws, regulations and regulatory and supervisory practices related to the banking sector and the operations of ADIA. Multiple meetings were held with various employees of the Bank of Albania (BOA), Ministry of Finance (MOF), the Banker's Association, the two savings and credit associations, and ADIA. ADIA completed a self-assessment in preparation for the FSAP.Publication European and Best Practice Bank Resolution Mechanisms : An Assessment and Recommendations for Policy and Legal Reforms(Washington, DC, 2012-03-20)The process of bank resolution, or the procedure for handling insolvency of banks using a range of tools, including alternatives to standard bankruptcy processes, has gained major traction since the experience of the 2008-09 financial crisis. In this context, this report reviews models for bank resolution that provide increased flexibility and describes several of the supervisory, legal and instrumental tools that can be used under modernized bank resolution procedures. As well, it looks at the recent European Commission proposals on this matter which take into account international best practices experiences. It also highlights areas of reform and areas where further regulatory considerations and priorities should be considered. The report reviews the bank resolution regimes of a group of European countries as well as those of two non-EU countries to highlight advantages as well as gaps in the legal and regulatory frameworks. This report surveys the banking and deposit insurance laws of six European countries : Poland, the Czech Republic, Germany, Spain, the U.K., and Croatia. Remedial enforcement measures for distressed banks and for bank resolution reveals that adoption of the EU legislative proposals, as described in the EC Communication, would require significant changes in legislation in four of the six countries. The report also reviews the laws of Canada and the U.S. for comparison, as implementation of their laws has already utilized several of the resolution instruments and mechanisms being considered.Publication The Use of Asset Management Companies in the Resolution of Banking Crises(World Bank, Washington, DC, 2000-02)Asset management companies have been used to address the overhang of bad debt in the financial system. There are two main types of asset management company: those set up to expedite corporate restructuring and those established for rapid disposal of assets. A review of seven asset management companies reveals a mixed record. In two of three cases, asset management companies for corporate restructuring did not achieve their narrow goal of expediting bank or corporate restructuring, suggesting that they are not good vehicles for expediting corporate restructuring. Only a Swedish asset management company successfully managed its portfolio, acting sometimes as lead agent in restructuring - and helped by the fact that the assets acquired had mostly to do with real estate, not manufacturing, which is harder to restructure, and represented a small fraction of the banking systems assets, which made it easier for the company to remain independent of political pressures and to sell assets back to the private sector. Asset management companies used to dispose of assets rapidly fared somewhat better. Two of four agencies (in Spain and the United States) achieved their objectives, suggesting that asset management companies can be used effectively for narrowly defined purposes of resolving insolvent and inviable financial institutions and selling off their assets. Achieving these objectives required an easily liquefiable asset - real estate - mostly professional management, political independence, adequate bankruptcy and foreclosure laws, appropriate funding, skilled resources, good information and management systems, and transparent operations and processes. The other two agencies (in Mexico and the Philippines) were doomed from the start, as governments transferred to them politically motivated loans or fraudulent assets, which were difficult for a government agency susceptible to political pressure and lacking independence to resolve or sell off.
Users also downloaded
Showing related downloaded files
No results found.