Report and Recommendations of the Cross-border Bank Resolution Group potx

Basel Committee

on Banking Supervision

Report and

Recommendations of the

Cross-border Bank

Resolution Group

March 2010

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ISBN 92-9131-819-1 (print)

ISBN 92-9197-819-1 (online)

Report and Recommendations of the Cross-border Bank Resolution Group

Contents

Executive Summary..................................................................................................................1

I. Background .....................................................................................................................6

II. Lessons learned from the case studies.........................................................................10

1. Fortis ....................................................................................................................10

2. Dexia....................................................................................................................11

3. Kaupthing.............................................................................................................12

4. Lehman Brothers..................................................................................................14

III. National Incentives and Crisis Resolution: Territorial and Universal Resolution

Approaches ...................................................................................................................16

IV. Recommendations to address the challenges arising in the resolution of a cross-border

bank...............................................................................................................................22

1. Effective national resolution powers.....................................................................22

2. Frameworks for a coordinated resolution of financial groups...............................24

3. Convergence of national resolution measures.....................................................26

4. Cross-border effects of national resolution measures..........................................27

5. Reduction of complexity and interconnectedness of group structures and

operations ............................................................................................................29

6. Planning in advance for orderly resolution ...........................................................31

7. Cross-border cooperation and information sharing..............................................34

8. Strengthening risk mitigation mechanisms...........................................................36

9. Transfer of contractual relationships ....................................................................40

10. Exit strategies and market discipline....................................................................43

Members of the Cross-border Bank Resolution Group...........................................................44