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      The Wide Angle – Bank resolution: living wills should come with marriage contracts
      THURSDAY, 25/05/2023 - Scope SE & Co. KGaA
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      The Wide Angle – Bank resolution: living wills should come with marriage contracts

      With yet another reassuring set of results behind them, Europe’s large banks look remote from resolution so now is a good time to reassess whether the existing resolution framework is still capable of delivering what it is expected of it.

      Recent events have demonstrated that a bank can fail not just because of capital depletion due to a pile-up of bad debt but also because of a run on deposits while prudential metrics remain adequate.

      Sam Theodore argues that in the new world we inhabit, the end-game of bank resolution should be a takeover of a stressed bank by a financially healthy peer. Pragmatically, resolution might also entail elements of partial and temporary State support if the political will is there. This runs counter to the zero-bailout credo embraced after the GFC but it may be a necessary compromise and better than a full taxpayer bailout.

      Read the latest The Wide Angle here.

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