TY  - UNPD
A1  - Faia, Ester
A1  - Weder di Mauro, Beatrice
T1  - Cross-border resolution of global banks
T2  - SAFE working paper series ; No. 88
N2  - Most recent regulations establish that resolution of global banking groups shall be done according to bail-in procedures and following a Single Point of Entry (SPE) as opposed to a Multiple Point of Entry (MPE) approach. The latter requires parent holding of global groups to put up front the equity capital needed to absorb losses possibly emerging in foreign subsidiaries-branches. No model rationalized so far such resolution regime. We build a model of optimal design of resolution regimes and compare three regimes: SPE with cooperative authorities, SPE with non-cooperative authorities and MPE (ring-fencing). We find that the costs for bondholders of bail-inable instruments is generally higher under noncooperative regimes and ring-fencing. We also find that in those cases banks have ex ante incentives to reduce their exposure in foreign assets. We also examine recent case studies that help us rationalize the model results.
T3  - SAFE working paper - 88 
KW  - single point of entry
KW  - multiple point of entry
KW  - strategic interaction of regulators
KW  - financial spillover
KW  - financial retrenchment
Y1  - 2015
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/37121
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-371218
IS  - First draft: October 2014. This draft: March 2015.
PB  - SAFE
CY  - Frankfurt am Main
ER  -