Subordinate Resolution ‐‐ An Empirical Analysis of European Union Subsidiary Banks

Bibliographic Data

ID10071097
AuthorsThomas Conlon (0000-0002-9187-5173, University College Dublin Dublin, corresponding author), John Cotter (0000-0001-7290-8606, University College Dublin Dublin)
Year2019
Volume57
Issue4
Pages857-876
Publication date2019-02-04
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJCMS Journal of Common Market Studies (JOURNAL)
Journal identifiersISSN: 0021-9886 • E-ISSN: 1468-5965
PublisherWiley (PUBLISHER • GB)
DOI10.1111/jcms.12849
OpenAlexW2906846335
LanguageEN
Citations received1
References cited27

To help curtail future sovereign exposures to banking losses, the European Union (EU) introduced the Bank Resolution and Recovery Directive, which mandates bail‐in of creditors in the event of significant bank losses. In this article, we examine the impact of resolution on subsidiary banks, notable in terms of their substantial role throughout the EU. Significant differences in risk and funding characteristics are apparent between domestic and cross‐border European bank subsidiaries. Subsidiary banks are found to possess a larger proportion of loss absorbing capacity than underlying parent banks. Results indicate the suitability of single point of entry resolution in the case of domestic subsidiaries and multiple points of entry resolution for cross‐border subsidiaries. Our findings highlight a worrying decline in loss absorbing capacity in European banks more generally since 2006, pointing to a necessary future focus on broad capital thresholds to ensure the success of the resolution model

Business · Capital (architecture · Creditor · Directive · Economics · European union · Financial system · Geography · International economics · International trade · Point (geometry · Resolution (logic · Subsidiary · Banking stability, regulation, efficiency · Credit Risk and Financial Regulations · Finance · Islamic Finance and Banking Studies

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