Survey of Resolution and Restructuring in Europe: Pre- and Post-BRRD

Authors

Christian M. McNamara, YPFS, Yale School of ManagementFollow
Carey K. Mott, YPFS, Yale School of ManagementFollow
Salil Gupta, YPFS, Yale School of ManagementFollow
Greg Feldberg, YPFS, Yale School of ManagementFollow
Andrew Metrick, YPFS, Yale School of ManagementFollow

Document Type

Survey

Case Series

Resolution and Restructuring

JEL Codes

G01, G29

Abstract

This paper surveys 19 case studies of bank resolutions and restructurings across 15 Key Design Decisions. It focuses on interventions that occurred in Europe both in the years leading up to the adoption of the Bank Recovery and Resolution Directive (BRRD) in 2014 (when many jurisdictions were constrained by a lack of legal authority) and in the years after the BRRD was in place. The main themes that emerge are: (a) the need for resolution and restructuring to eliminate uncertainty about an institution’s solvency by closing it, recapitalizing it, or merging it with a healthier institution; (b) the importance of effective valuation in achieving this result; (c) the necessity of clarity in the treatment of creditors; and (d) the value of a credible bail-in tool to incentivize creditors to agree to solutions outside of resolution.

Recommended Citation

McNamara, Christian M.; Mott, Carey K.; Gupta, Salil; Feldberg, Greg; and Metrick, Andrew (2024) "Survey of Resolution and Restructuring in Europe: Pre- and Post-BRRD," Journal of Financial Crises: Vol. 6 : Iss. 1, 1-34.
Available at: https://elischolar.library.yale.edu/journal-of-financial-crises/vol6/iss1/1