Looking into Pandora's box of banking crises: supervision and resolution in the EU regulation
Pierpaolo Marano, Professore Associato di Diritto dell'Economia, Università Cattolica del Sacro Cuore e Università di Malta
1. Introduction – 2. Between supervision and resolution from national and international perspectives – outline of current problems. – 2.1. Crisis management framework for banks and its institutional set-up. – 2.2. Drifting between supervision and resolution powers. – 2.3. Crisis management and home-host issues. – 2.4. Non-banking activities of banks and groups and crisis management. – 2.5. Summary of identified problems – 3. The proposed changes to the EU regulatory framework on crisis management and their assessment. – 4. Unresolved gaps and proposals for a more comprehensive regulatory framework – 5. Conclusion.
Il saggio analizza la normativa sulla gestione delle crisi bancarie elaborata dall’Unione europea. La ricerca mira a identificare i rischi che ancora non si sono palesati nelle diverse crisi ma che potrebbero verificarsi. L’obiettivo è di accertare se l’anzidetto quadro normativo considera adeguatamente il collegamento tra supervisione bancaria e risoluzione, tenendo conto delle diverse prospettive nazionali e transfrontaliere e delle dipendenze da altre istituzioni finanziarie all'interno dello stesso gruppo.
The article explores the challenges or inconsistencies in the crisis management framework that may not yet have materialized but may materialize in the future. The above relationship will be analyzed from the point of view of failures of credit institutions to identify the unobvious dependencies, overlaps, and loopholes in the regulatory framework, which regulation should address instead. The critical review of the applicable crisis management framework suggests that the topic of the banking crisis is like Pandora’s box – the following examples and new dimensions of crises open the next challenges that the financial safety net institutions dealing with crisis management might suffer. The identified problems include a complicated financial safety net structure (where the mandates of some institutions sometimes overlap, and some areas are not covered), conflicts of interest between the supervisor and the resolution authority, so-called home-host problems, and lack of a complex and coherent system for the crisis management of the capital groups delivering multiple financial products, including financial conglomerates. The upcoming EU legal acts (CMDI package, IRRD) address some identified shortcomings to a certain level, usually partially.