The Great Financial Crisis (GFC), which began in 2007 and whose effects are still being felt today, exposed weaknesses in the systems of problem bank intervention and resolution in many countries around the world. As a result, jurisdictions have been improving their frameworks and tools. This course covers the range of available tools in the late 2010s for intervention (enforcement actions, conservatorship / provisional administration, etc.), resolution (sale of business, bridge institution, asset separation, and bail-in), and bankruptcy / liquidation. When to intervene or resolve will also be stressed. The course will also cover emerging trends in the priority of claims in bank resolution, choosing the least-cost option, and the “single point of entry” concept for complex or multinational banking organizations. The basics of recovery plans (plans submitted by the bank to ensure the delivery of critical services while the bank attempts to recover from severe financial or non-financial problems) and resolution plans (plans developed by the banking supervisor, in consultation with the bank, to ensure the delivery of critical services in resolution) will also be explained and discussed. Case studies will show participants effective and ineffective attempts to intervene in and resolve problem banks in recent years.
The course will enable the participants to frame discussions within their regulatory / supervisory organizations around the topics of 1) when and how to intervene or resolve; 2) how to choose the appropriate resolution tool(s); 3) how to issue guidelines to their regulated banks on the preparation of recovery plans; 4) how to work with banks to develop resolution plans.
Participants should have at least three years of experience in the regulation and supervision of problem banks. They should possess sufficient familiarity with the financial statements of banks in order to understand real world examples of merger, split, liquidation and distribution of assets, holding company and group structures, and estimating costs of particular resolution strategies. It is recognized that central banks and monetary authorities are often not the supervisory or resolution agencies in some economies; accordingly, central banks are encouraged to invite participants from these agencies in their jurisdictions as well.
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