Risk and Regulation in Euro Area Banks (eBook)

Completing the Banking Union

Francesca Arnaboldi (Autor)

eBook Download: PDF

2019 | 1st ed. 2019
XXVI, 145 Seiten
Springer International Publishing (Verlag)
978-3-030-23429-4 (ISBN)

Infos

Since the last financial crisis, much work has been undertaken to strengthen the ability to respond to distress in the EU financial system. However, reforms enacted since the Single Resolution Mechanism was created in July 2014 as part of the Banking Union initiated in 2012 mainly focused on non-performing loans, and the third pillar of the Banking Union, namely a European Deposit Insurance Scheme, has not been completed.

Against this backdrop, this book focuses on the reasons why the EU banking system continues to remain fragile. In particular, high stocks of non-performing loans in some countries, the Level 3 assets evaluation and high exposure of many banks to the debts of their own governments are among the major concerns. Secondly, the book discusses the completion of the public safety net for banks, including deposit insurance, which remains primarily at the national level. This creates scope for contagion from banking sector fragility to national sovereign debt distress. Of interest to banking researchers, academics and students, this book combines rigorous analysis of the regulatory framework and empirical investigation on EU banking system data to prove that market discipline and risk sharing should be viewed as complementary pillars of the Euro-area financial architecture rather than as substitutes, requiring a reformed institutional framework.

Francesca Arnaboldi is an Associate Professor in banking and finance at the University of Milan, Italy. She gained her BSc and MSc in Finance from Bocconi University, Italy, her MSc in Financial Management from the University of London, CeFiMS, UK and her PhD in Finance from the University of Bologna, Italy. Francesca has been working as a Visiting Researcher in the Centre for Banking Research at the Cass Business School, City University, London, UK since 2009 and she is a member of the Research Center on Financial Studies at University of Modena and Reggio Emilia, Italy. She has been a visiting researcher/associate member at several organisations including the School of Business and Economics, Loughborough University; Centro di ricerca coordinata sulle misure di prevenzione personali e patrimoniali, University of Milan; Alphonse and Dorimene Desjardins International Institute for Cooperatives, HEC Montreal; and the Stern School of Business, New York University. Francesca's research interests focus on international banking; corporate governance; bank competition and performance; financial innovation; bank regulation and supervision. Her research has been published in international peer-reviewed books and journals.

Inhalt

Foreword 7
Preface 9
Acknowledgements 14
Contents 15
List of Figures 19
List of Tables 22
Chapter 1: The Euro Area Banking System: Where Do We Stand? 24
1.1 Introduction 24
1.2 Euro Area Banking System Restructuring Process 25
1.2.1 Cost-Efficiency 30
1.2.2 Financial Integration 31
1.2.3 Challenges for Regulators 33
1.3 Euro Area Banking System Fact Sheets 34
1.3.1 Listed and Not Listed Banks 36
1.3.2 Southern and Northern Euro Area Countries 38
1.4 Conclusion 40
References 41
Chapter 2: The Main Challenges Facing the Euro Area Banking System 43
2.1 Introduction 43
2.2 Non-performing Loans: Why the Supervisory Focus? 44
2.3 Recent Developments in Non-performing Loans 45
2.4 Legislative Framework to Address NPLs 50
2.4.1 Proposal for a Regulation Amending the Capital Requirements Regulation 54
2.4.2 Proposal for a Directive on Credit Servicers, Credit Purchasers and the Recovery of Collateral 54
2.4.3 Blueprint on the Set-Up of National Asset Management Companies 56
2.5 Supervisory Framework on NPLs 57
2.5.1 European Banking Authority and European Systemic Risk Board 60
2.6 Conclusion 61
References 62
Chapter 3: Non-performing Loans in the Euro Area 64
3.1 Introduction 64
3.2 Restructuring Process in High NPL Euro Area Countries 64
3.2.1 Greece 66
3.2.1.1 Regulatory Changes 67
3.2.1.2 Centralised Management Scheme 68
3.2.1.3 Asset Protection Scheme 69
3.2.2 Cyprus 69
3.2.2.1 Regulatory Changes 70
3.2.2.2 ESTIA Scheme 72
3.2.3 Portugal 73
3.2.3.1 Regulatory Changes: The First Pillar 73
3.2.3.2 The Second Pillar 76
3.2.3.3 The Third Pillar 76
3.2.3.4 The Platform for Integrated Management of Bank Loans 77
3.2.4 Italy 78
3.2.4.1 Drivers of NPL Reduction 79
3.2.4.2 The Italian Guarantee on Securitisation of Bank Non-performing Loans 81
3.3 Conclusion 82
References 85
Chapter 4: Level 3 Assets and Sovereign Exposure 88
4.1 Introduction 88
4.2 Level 3 Assets 89
4.2.1 Regulatory and Prudential Framework 94
4.3 Sovereign Debt Exposure 97
4.3.1 Data on Sovereign Debt Exposure in the Euro Area Countries 98
4.3.2 Theoretical Explanations 100
4.3.3 Policymakers’ Debate 101
4.3.4 High-Level Task Force on Sovereign Exposures 104
4.4 Conclusion 105
References 107
Chapter 5: Progress on the First Two Pillars of the Banking Union 110
5.1 Introduction 110
5.2 Revised Rules on Capital Requirements and Resolution 111
5.2.1 2016 Commission Package 113
5.2.2 Directive (EU) 2019/878 (CRD V) and Regulation (EU) 2019/876 (CRR II) 114
5.2.2.1 Capital and Liquidity Requirements 114
5.2.2.2 Bank Crisis Management Framework 117
5.3 What Is Left? 119
5.3.1 Common Backstop 119
5.3.2 Capital Markets Union 122
5.4 Conclusion 125
References 126
Chapter 6: The Third Pillar of the Banking Union: The European Deposit Insurance Scheme 129
6.1 Introduction 129
6.2 Legislative Framework 130
6.3 European Deposit Insurance Scheme 131
6.3.1 November 2015 Commission Proposal 131
6.3.2 European Parliament and ECOFIN Council’s Position 133
6.3.3 October 2017 Commission Communication 135
6.3.4 Coordination with National Deposit Insurance Schemes 138
6.3.5 Interaction Between the Pillars of the Banking Union 138
6.4 Conclusion 140
References 141
Chapter 7: The European Deposit Insurance Scheme 143
7.1 Introduction 143
7.2 The EBA Guidelines 143
7.3 Monitoring System of Bank Riskiness 145
7.3.1 Risk Indicators 145
7.3.2 Core Indicators 147
7.3.3 Additional Indicators 148
7.4 Individual Risk Score 150
7.4.1 Bucket Method 150
7.4.2 Aggregate Risk Score 151
7.5 Conclusion 160
References 161
Correction to: Risk and Regulation in Euro Area Banks 162
Index 163

Produkt-Details

• Erscheint lt. Verlag: 31.10.2019
• Reihe/Serie: Palgrave Macmillan Studies in Banking and Financial Institutions
• Reihe/Serie: Palgrave Macmillan Studies in Banking and Financial Institutions
• Zusatzinfo: XXVI, 145 p. 23 illus., 8 illus. in color.
• Sprache: englisch
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Schlagworte: Banking • banking union • Bank performance and risk • Bank regulation • Deposit Insurance Schemes • EU financial system • European finance • NPL • Regulatory Framework
• ISBN-10: 3-030-23429-0 / 3030234290
• ISBN-13: 978-3-030-23429-4 / 9783030234294