Dirk Schoenmaker's chapter in 'The Palgrave Handbook of European Banking', a handbook that collates the expertise and research of leading academic and senior policy makers in the field of European banking
EU at Crossroads: How to respond to Misalignments in Bank Regulation and achieve a consistent financial Framework?
Italian banks are back in the spotlight. After MPS failed to raise enough capital from private investors earlier this year, Banco Popolare di Vicenza (BPVI) and Veneto Banca take centre stage. The story of these two banks epitomises the strategy of delayed reform that has been so characteristic of the Italian banking crisis.
The year 2016 has not been good to Italian banks. While resilient to the first wave of financial crisis in 2008, due to their low exposure to US sub-prime products and to the fact that Italy did not have a pre-crisis housing bubble, they have been suffering much from the euro sovereign crisis and the ensuing deteriorating economic conditions.
As a consequence of the global financial crisis, various initiatives have been taken in different jurisdictions to ensure the future resolvability of banks without massive use of public funds. In Europe, the BRRD introduced the concept of MREL, which is in the process of being defined.
Weakness in the Italian banking sector is a major concern for the euro area. Retail investors stand to lose out if BRRD bail-in rules are strictly applied, and many in Italy are seeking an exception for political reasons. However, Silvia Merler argues that this would set a dangerous precedent. She calls for an orderly bail-in, followed by compensation for investors mis-sold unsuitable products.
Spain is among the countries still recovering from the financial crisis. While misjudged investments were part of the cause, these past mistakes could offer lessons for the European banking union.
Italy’s new bank fund Atlas might be what is needed in the short run, but in the longer term the fund will increase systemic risk. What ultimately matters is how this initiative will affect the quality of bank governance, a key issue for the future resilience of the system.
Concerns about Europe’s banks contributed to turmoil in global financial markets in February, but Europe’s new banking sector policy regime should gradually help reduce uncertainty.
Europe’s banks are in retreat from playing a global investment banking role, and this trend is likely to continue in the future. What will be the consequences and what should be the policy response?
What progress is being made on an optimal system of bank resolution following the disasters of the financial crisis?
In the framework of our 10th anniversary celebrations, Bruegel is organising a series of events in the capitals of our member states. These debates, talks and conferences will bring crucial European topics to audiences across the continent. One year after a major overhaul of European banking regulation and supervision, the National Bank of Belgium and […]