Practical Guidelines for Effective Bank Resolution

This study adopts a practical approach in developing a set of guidelines on designing a bank resolution framework and implementing efficient bank resolution methods in Latin America. It identifies six pillars that are useful for establishing a bank...

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Bibliographic Details
Main Authors:	Bolzico, Javier, Mascaró, Yira, Granata, Paola
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO FINANCE ACCESS TO INFORMATION ACCOUNT HOLDERS ACCOUNTABILITY ACCOUNTING ACCOUNTING POLICIES ACCOUNTING STANDARD ACCOUNTING STANDARDS ADMINISTRATIVE COSTS ASSET MANAGEMENT ASSET MANAGEMENT COMPANIES ASSET VALUE AUDITING AUDITS AUTONOMY BAD BANK BALANCE SHEET BALANCE SHEETS BANK ASSETS BANK CAPITALIZATION BANK DEPOSITS BANK FAILURE BANK FAILURES BANK FOR INTERNATIONAL SETTLEMENTS BANK LENDING BANK MANAGEMENT BANK RESTRUCTURING BANK SUPERVISION BANKING CRISES BANKING INDUSTRY BANKING INSTITUTIONS BANKING LAW BANKING PRACTICES BANKING SERVICES BANKING SUPERVISION BANKING SYSTEM BANKRUPTCY BANKS BEST PRACTICE BEST PRACTICES BONDS BUYER BUYERS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL INJECTIONS CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STOCK CASH FLOWS CENTRAL BANK CIVIL LAW CLAIMANTS COMMERCIAL PAPER CONNECTED LENDING CONTINGENCIES CONTINGENCY CONTINGENCY PLAN CONTRIBUTIONS CREDIBILITY CREDIT CARD CREDIT CARD COMPANY CREDIT RATINGS CREDITORS CREDITS CROSS-SUBSIDIES CURRENT ACCOUNT DEBT INSTRUMENTS DEBTORS DEMAND DEPOSITS DEPOSIT DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSITOR DEPOSITORS DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT BANK DISCLOSURE OF INFORMATION DISCLOSURE STANDARDS DIVERSIFICATION DOMESTIC BANK DUE DILIGENCE EARLY INTERVENTION ECONOMIC COSTS ECONOMIC CRISIS ECONOMIC MANAGEMENT ELIGIBILITY CRITERIA EMPLOYERS EQUITY SWAPS EXCLUSION EXPENDITURES EXTERNAL AUDITORS EXTERNAL CREDIT RATINGS EXTERNALITIES FEDERAL BANKS FINANCES FINANCIAL ASSISTANCE FINANCIAL COST FINANCIAL COSTS FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL LOSSES FINANCIAL PERFORMANCE FINANCIAL POSITION FINANCIAL RESOURCES FINANCIAL RESTRUCTURING FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STATEMENTS FINANCIAL SYSTEM FINANCIAL SYSTEMS GAMBLING GLOBALIZATION GOOD BANK GOVERNMENT FINANCES GROUP DEPOSITS GROUP OF BANKS GUARANTEE FUND HUMAN RESOURCES INCOME INFORMATION ASYMMETRIES INFORMATION REQUIREMENTS INFORMATION SHARING INSURANCE AGENCY INSURED DEPOSITS INTERNATIONAL ACCOUNTING STANDARDS INTERNATIONAL BANK INTERNATIONAL BANKS INVENTORY JUDICIAL SYSTEM LABOR COSTS LARGE BANK LARGE BANKS LAWS LEGAL AUTHORITY LEGAL FRAMEWORK LEGAL FRAMEWORKS LEGAL PROTECTION LEGISLATION LIABILITY LIQUIDATION LIQUIDATION VALUE LIQUIDITY LIQUIDITY ASSISTANCE LIQUIDITY POSITION LOAN LOCAL MEDIA MAJOR BANKS MANDATES MARKET DISCIPLINE MARKET ENVIRONMENT MARKET PARTICIPANTS MAXIMUM CONTRIBUTION MONETARY FUND MORAL HAZARD MORAL SUASION NET ASSET NET LOSSES NET VALUE NET WORTH ORIGINAL ASSETS OTHER ASSETS PAYMENT SERVICES PAYMENT SYSTEM PENSION PENSION ACCOUNTS PORTFOLIO PRACTICAL KNOWLEDGE PRACTICAL TIPS PRESENT VALUE PRESS RELEASES PRINCIPAL-AGENT PROBLEM PRIVATE BANKS PRIVATE FUNDS PRIVATE INVESTMENT PRIVATE INVESTMENTS PRIVATE INVESTORS PROBABILITY PROFITABILITY PUBLIC AGENCIES PUBLIC FUNDS PURCHASES QUALITY OF ASSETS QUESTIONNAIRES RECAPITALIZATION REGULATORY FRAMEWORK REORGANIZATION RESERVE RESERVE REQUIREMENT RESERVES RESPONSIBILITIES RETURN RIGHTS OF CREDITORS RISK ASSESSMENT RISK DIVERSIFICATION RISK MANAGEMENT RISK OF LOSS RISK PROFILE RISK TAKING SALE SALES SEIZURE SENIOR SENIOR BONDS SHAREHOLDER SHAREHOLDERS SMALL BANKS SOLE PROVIDER SOLVENCY STAKEHOLDERS START-UP STOCKS SUBORDINATED DEBT SUPERVISORY AUTHORITIES SUPERVISORY AUTHORITY SUPERVISORY POWERS SUPPLY OF CREDIT TERMINATION TIME DEPOSITS TOTAL COST TOTAL COSTS TRANSACTION TRANSPARENCY TRUST FUND TRUST FUNDS TRUSTEES TYPE OF PURCHASE UNEMPLOYMENT VALUABLE VALUE OF ASSETS WITHDRAWAL WORTH
Online Access:	http://documents.worldbank.org/curated/en/2007/11/8667097/practical-guidelines-effective-bank-resolution http://hdl.handle.net/10986/7548

Description
Summary:	This study adopts a practical approach in developing a set of guidelines on designing a bank resolution framework and implementing efficient bank resolution methods in Latin America. It identifies six pillars that are useful for establishing a bank resolution framework. The study aims to guide policymakers choose from a set of bank resolution methods, by outlining their advantages and disadvantages and establishing efficiency requirements. The focus is on the good-bank/bad-bank approach, which is a type of purchase and assumption mechanism that has increasingly become part of the newer legal frameworks in Latin America. The good-bank/bad-bank approach is an effective bank resolution method because it can be very successful in meeting certain efficiency criteria, including the minimization of contagion costs and preservation of business.

Practical Guidelines for Effective Bank Resolution

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