Florence School of Banking & Finance and School of Transnational Governance Joint Autumn School
The Law, Economics and Practice of EU Banking Resolution
Deadline for registration: 31 October 2017
The financial crisis of 2007-8 taught us that Europe needs more resilient institutions, with more capital and liquidity resources, to better withstand stress and market turmoil. It also needs to fix idiosyncratic weaknesses of credit institutions. To this end the new EU resolution framework requires recovery and resolution plans to be established for each supervised entity, to ensure its resolvability and to minimise spill-over effects on the real economy and the burden on the taxpayer when banks fail or in systemic crisis.
Those are the key elements at the core of the European Bank Recovery and Resolution Directive (BRRD). The BRRD, together with the institutional counterpart for the Banking Union, the Single Resolution Mechanism, is at its final stages of implementation and further developed with the November 2016 package proposed by the Commission.
The joint FBF-STG Autumn School seeks to intensify and strengthen knowledge on the part of public authorities, practitioners and academics as well as foster an in-depth dialogue on the merits and challenges in the implementation of the new EU resolution framework.
- Acquire the essentials of the new EU banking resolution regime – its rules and principles, actors and procedures
- Understand and apply the key concepts of bank resolution (e.g. Resolution Tools, Resolution Objectives, Bail-In, No Creditor Worse Off in Liquidation, Minimum Requirements for Own Funds and Eligible Liabilities, Total Loss Absorption Capacity)
- Learn how to assess recovery plans in practice
- Learn how to design and implement resolution plans in practice
Day 1 – Wednesday 22 November
The European Resolution Architecture: a Bird Eye’s View
Introduction to Banking Resolution (Bart Joosen)
- Understanding the bifurcated legislative architecture, BRRD v. Single Resolution Mechanism Regulation.
- Recovery planning, recovery execution and early intervention and interaction between competent authority and institution.
- Resolution planning and the determination of resolvability.
- Resolution objectives, role of valuation, determination of resolution trigger (point of non-viability v. failing or likely to fail).
- Resolution execution instead of ordinary wind down in liquidation, resolution principles to be observed (NCWO and others).
Capital regulation for resolution purposes (Bart Joosen)
- Status of European capital buffer building programme, Basel III, CRDIV/CRR and proposals for CRR2/CRDV.
- Restraining dividend, coupon and bonus distribution upon MDA-calculations: building up Capital Buffers and MREL.
- Pillar 1 capital, Pillar 2 required capital and Pillar 2 Guidance
- Going concern capital and gone concern capital.
- Loss absorption principles and Recapitalisation.
Practical exercise on Maximum Distributed Amount calculation (Bart Joosen)
A practical and interactive exercise where participants will be assigned different roles in the simulated calculation of the Maximum Distributable Amount of dividend, coupon on Addition Tier 1 capital instruments and bonusses based on a balance sheet, capital funding plan and profit and loss account of a fictive European bank.
There will be groups working from the perspective of bank’s stakeholders and groups that will work from the perspective of the competent authority. In the plenary feedback session these different perspectives will be debated among the participants, moderated by the instructor.
Day 2 – Thursday 23 November 2017
Recovery and Resolution Planning in Practice
Bank valuation, Non Performing Loans, Asset management Companies (Andrea Resti)
- Bank valuation: standard approaches and their use for banks undergoing resultion.
- Valuating NPL and estimating recoveries.
- Asset management companies.
Bank Liability Structure and Resolution: CoCos and Bail-Inable Debt (Andrea Resti)
- Contingent-convertible liabilities (“Cocos”).
- Bail-inable debt.
Recovery Planning (Boudewijn Berger)
- What should the Recovery Plan contain? Requirements in the BRRD, EBA guidelines and technical standards and additional requirements by the authorities.
- How does ABN AMRO prepare its Recovery Plan? Processes and procedures, departments involved, annual cycle, scenarios and dry runs.
- Recovery Plan versus Resolution Plan: a compare and contrast.
- Practical experiences and some views on the cooperation, coordination and exchange of information between the supervisor and the resolution authorities.
Day 3 – Friday 24 November 2017
Financing of Resolution and Instruments of Resolution Authorities
Resolution Planning and Internal Financing of Resolution (Tobias Tröger)
- The resolution weekend.
- The specific goals of resolution planning, its multi-stage nature and constant updating.
- Loss absorption and recapitalization objectives in resolution planning.
- MREL specification as part of resolution planning to facilitate bail-in.
- Run risk in resolutions with bail-in.
Day 4 – Saturday 25 November 2017
The Economics of Resolution
Briefing on options for MREL calibration (Tobias Tröger)
- G-SII TLAC and institution specific MREL (add on).
- calibration of institution specific MREL (including MREL guidance).
- subordination requirement and exceptions.
- internal and external MREL in cross-border banking groups.
Bart Joosen (course director)Bart P.M. Joosen is trained as civil law lawyer at Tilburg University, the Netherlands. He obtained his (equivalent to) LL.M degree in 1987. After completion of his academic study he was appointed as lecturer in the law faculty of Tilburg University in 1987. He successfully defended his dissertation on “Transfer of undertakings in bankruptcy” at Tilburg University and was promoted to doctor in law science (PhD) in 1998. He works since 1992 in private practice particularly for financial market clients. His main areas of expertise are in the field of financial services supervision with a focus on micro-prudential supervision of banks (including in-depth Basel II/Basel III and Solvency II knowledge), insurance companies and investment firms and payment services. Besides working in private practice, he is an extraordinary professor Financial Supervision Law at the VU University in Amsterdam.
Boudewijn BergerBoudewijn Berger (30 May 1963) is responsible for recovery and resolution planning activities at ABN AMRO Bank N.V. He started his professional career with ABN AMRO in 1991. From 1996 onwards he specialised in asset securitisation, holding management positions in Amsterdam, Singapore and Hong Kong. Upon his return in the Netherlands in 2008 he spent 3 years at the Asset & Liability Management department of ABN AMRO. In 2011, he prepared the first recovery plan for the bank. Since then he has been fully involved in recovery and resolution planning. Boudewijn represents ABN AMRO in various banking industry platforms and actively participates in crisis management working groups of the Dutch Banking Association and the European Banking Federation. Boudewijn studied Business Administration at the Rijksuniversiteit Groningen, the Netherlands.
Andrea RestiAndrea Resti is an associate professor at Bocconi University in Milan. He is the vice-chairperson of the Banking Stakeholder Group at the European Banking Authority. He is an external consultant for Bank Supervision at the European Parliament, independent board member at REV Gestione crediti, and Senior advisor at CRIF. He authored several books on risk management and banking, both in Italian and in English. His main research areas are Credit Risk Management and Measurement, Basel II and the regulation of financial risks, Bank Strategic Management, Quantitative Efficiency Analysis for Banks and multiproduct Organizations. He has been a consultant and economic advisor to the Bank of Italy and to several major commercial banks in Italy. Occasionally, he has acted as an expert on financial crimes on behalf of several large financial institutions and rating agencies, as well as the Milan Court of Justice.
Emiliano TorneseEmiliano Tornese is Deputy Head of the Resolution and Crisis Management Unit at the European Commission. In that capacity, he has been involved with the design and negotiation of the Bank Recovery and Resolution Directive and of the Single Resolution Mechanism, and is currently focusing on their implementation. Previously, he was the Secretary of the European Securities Committee, where he coordinated the European Union’s Ministries of Finance in their regulatory capacity for financial services. He has also been an advisor to the European Financial Stability Facility, the European Stability Mechanism, and within the Troika on the implementation of the national reform programs in Ireland. He holds an LL.M. from Columbia Law School (2007). He has practiced law, with a focus on Mergers & Acquisitions and Capital Markets, in New York, London, Paris, and Rome.
Tobias TrögerTobias Tröger holds since 2011 the Chair of Private Law, Trade and Business Law, Jurisprudence at Goethe-University Frankfurt am Main. He is Program Director Corporate Finance at the Research Center Sustainable Architecture for Finance in Europe (SAFE) in Frankfurt and Chairman of the Board of the European Banking Institute (EBI). His research interests include contract law and contract theory, corporate law (particularly, comparative corporate governance and corporate finance), banking law and the economic analysis of law. He holds a Ph.D.-degree from the Eberhard Karls University of Tübingen and an LL.M. from Harvard Law School. Throughout his academic career, he received various scholarships and awards, among others the Award of the Reinhold and Maria Teufel- Foundation for his Ph.D.-Thesis, and the Irving Oberman Memorial Award from Harvard Law School. He is an advisor to the European Parliament on matters regarding the Single Supervisory Mechanism (SSM).
- Policy-makers and experts from European institutions and agencies (European Commission, European Central Bank/Single Supervisory Mechanism, European Systemic Risk Board, Single Resolution Board, European Banking Authority, European Stability Mechanism)
- Policy-makers and experts from National Finance Ministries, National Central Banks, National Resolution Authorities and officials from Foreign Affairs Ministries.
- Private lawyers and private banking practitioners
- PhD researchers and post-doc researchers
- Undergraduate or graduate degree in Social Sciences or equivalent
- Prior professional exposure to banking regulation
- Basic knowledge of the Bank Recovery and Resolution Directive (BRRD), Single Resolution Mechanism Regulation (SRMR), Capital Requirements Regulation (CRR) and Capital Requirements Directives (CRD) IV, Institutional EU law and financial regulation.
1500 € – Public Authorities (e.g. National Competent Authorities, Central Banks) and European Institutions
2000€ – Private Sector
850€ – Students (with certificate of studies)
The course fee covers coffee and lunch breaks. Travel and hotel costs are not included.
No group deals apply.