A banking problem ?

BANK RESTRUCTURING CONSULTANT

A bank in peril is not necessarily doomed ; simple ways out do exist without necessarily calling for public money. The undersigned has successfully carried out and finalized banks and finance companies restructuring missions in Nigeria, Ivory Coast, Algeria, Thaïland and Yemen.

Raymond BIRÉ

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European banking supervision system

  • 1 - ORIGINALLY

    • A - THE EUROPEAN CENTRAL BANK (ECB) had, initially, two functions :

      • To establish banking regulations for the Euro area, their implementation being afterwards controlled by the SSM.
      • Supervision of the 122 most important banks of the area which represented 82% of the Union’s banking assets.
    • B - SINGLE SUPERVISORY MECHANISM (SSM) implemented on March 19, 2013.

      It was a regulatory body in charge of controlling, on a second degree, smaller banks in the Euro Zone; these continued to be supervised, on a first degree, by their respective national authorities.

    • C - EUROPEAN FINANCIAL STABILITY FUND (EFSF)

      • Implemented on May 9, 2010
      • Objectives : to provide financial assistance to European countries in economic difficulties; it could :
        • redeem bonds on secondary markets,
        • participate in the rescue of banks in difficulties,
        • grant loans to countries in economic difficulties, only when, these were unable to borrow on finance markets at acceptable rates.
      • Capacity : initially € 440 Billion, the EFSF has seen afterwards its capacity raised to € 1 000 billion through the issuance of bonds on finance markets.
      • Cessation of activity : July 1, 2012.
    • D - EUROPEAN FINANCIAL STABILITY MECHANISM (EFSM)

      • Presentation : It had at his disposal funds stemming from an emergency funding program. These funds were raised on finance markets and guaranteed by the European Commission thanks to the use of the European Union budget
        It worked under the supervision of the European Commission and aimed at preserving the financial stability of the European Union by providing financial assistance to the Member States in economic difficulties.
      • Cessation of activity : July 1, 2012.
  • 2 - CURRENT STRUCTURE

    • A - FUND FOR DEPOSITS GUARANTEE AND RESOLUTION (FDGR)

      • Implementation: 31-12-2010
      • Objectives : The member States of the European Union will :
        • by 31-12-2010 provide banks with guarantees in favour of depositors with assets up to € 100 000,
        • reduce to 5 working days the time limit for declaration of bank insolvency,
        • implement the repayment by failed banks of their customers guaranteed deposits within 20 working days.
    • B - THE EUROPEAN CENTRAL BANK (ECB)

      Supervision, on the first degree, of the 128 largest banks of the Union.

    • C - EUROPEAN BANKING AUTHORITY (EBA)

      Operational as of January 1st 2011; its functions are :

      • implementation of supervision rules for European banks, to replace t ECB’s initial responsibilities.
      • to carry stress tests for the most important banks of the Union.
    • D - EUROPEAN STABILITY MECHANISM (ESM)

      Implemented on September 27, 2012; since 1 July 2012 it has replaced the :

      • European Financial Stability Fund (EFSF) and,
      • European Financial Stability Mechanism (EFSM).
        It can raise up to € 700 Billion on finance markets. Functions :
        • to help out countries in difficulties,
        • to rescue private banks in trouble.
    • E - SINGLE RESOLUTION MECHANISM (SRM)

      • Functions
        It aims to consolidate the European banking system by means of a continuous control entrusted to the ECB.
        As an actor of the SRM the ECB can take, in the course of supervision exercises , binding decisions against the supervised institutions, ex: assessment of an adequate level of equity against estimated risks.
      • Implementation
        January 1, 2016 for all components of the system.
      • Scope
        Is limited to the 128 banks under of the ECB direct supervision.
      • Functions
        To allow for orderly resolutions of failed banks with the minimal cost to the taxpayer and the economy.
      • Components
        The SRM consists of two bodies :
        • COUNCIL OF UNIQUE RESOLUTION (CUR).
          The European Central Bank reports to the Board of Council of Unique Resolution (CUR) the predictable failure of a bank.
          When the conditions for feasible rescue are met, the CUR adopts a resolution scheme.
          The resolution scheme is immediately transmitted to the European Commission.
        • FUND OF UNIQUE RESOLUTION (FRU).
          It is used for the resolution of failed banks.
          It is funded by the banking sector; proposed capacity of € 55 Billion which is expected to be reached in 2022.
          The Fund will be built up though "national compartments ", which after a transitional period of 8 years will be merged together.