Valuation reports in the context of banking resolution: What are the challenges?
This study discusses the challenges concerning bank valuation reports in resolution. The resolution mechanism has three types of valuation reports, respectively to determine whether a bank is failing or likely to fail (valuation 1), to inform the use of the resolution tools including bail-in (valuation 2), and to ensure that the no creditor worse off condition is respected (valuation 3). The first experience with the preparation of valuation reports shows that even with the more formal procedures there are still substantial uncertainties regarding the outcome of these valuations due to organisational, legal and economic challenges. Additional mitigating measures should be considered to reduce the uncertainty.
In-Depth Analysis
External author
Willem Pieter de Groen, CEPS
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- aid for restructuring
- banking policy
- BUSINESS AND COMPETITION
- business organisation
- civil law
- company in difficulties
- cooperation policy
- credit institution
- economic conditions
- economic policy
- economic stabilisation
- ECONOMICS
- FINANCE
- financial aid
- financial institutions and credit
- financial intervention
- financial solvency
- free movement of capital
- INTERNATIONAL RELATIONS
- investment company
- LAW
- market supervision
- monetary economics
- money-market liquidity
- TRADE
- trade policy