scholarly journals The impact of the European Banking Union’s Single Supervisory Mechanism on corporate governance practices in European banks

2018 ◽  
Vol 13 (2) ◽  
pp. 164-177 ◽  
Author(s):  
Udo Braendle
Keyword(s):  
Corporate Governance ◽  
Banking System ◽  
Banking Union ◽  
Single Supervisory Mechanism ◽  
European Banking Union ◽  
Regulatory Changes ◽  
Governance Practices ◽  
European Banking ◽  
European Banks ◽  
The Impact

Weak corporate governance in financial institutions has been a contributing factor of the financial crisis. The topic has, therefore, become the key priorities of banking supervision, because one of the takeaways was that. The article gives an overview about the newly established European Banking Union and about its structure focusing on the first pillar, the Single Supervisory Mechanism (SSM). In a second step, the focus is laid on the recent regulatory changes regarding corporate governance, the related supervisory practice and implications for European banks. Overall, the conducted changes in the regulatory framework, especially regarding corporate governance, seem to meet the objective of ensuring safety and soundness of the European banking system. Room for improvement is found regarding proportionality and transparency of the supervisory practices as well as its influence on banks’ profitability.

scholarly journals European Banking Union and bank risk disclosure: the effects of the Single Supervisory Mechanism

2021 ◽  
Author(s):  
Yener Altunbaş ◽  
Salvatore Polizzi ◽  
Enzo Scannella ◽  
John Thornton
Keyword(s):  
Bank Risk ◽  
Banking Union ◽  
Risk Disclosure ◽  
Exogenous Shock ◽  
Bank Supervision ◽  
Single Supervisory Mechanism ◽  
European Banking Union ◽  
European Banking ◽  
Bank Disclosure ◽  
The Impact

AbstractThis paper provides evidence on the impact of European Banking Union (BU) and the associated Single Supervisory Mechanism (SSM) on the risk disclosure practices of European banks. The onset of BU and the associated rules are considered as an exogenous shock that provides the setting for a natural experiment to analyze the effects of the new supervisory arrangements on bank risk disclosure practices. A Difference-in-Differences approach is adopted, building evidence from the disclosure practices of systemically important banks supervised by the European Central Bank (ECB) and other banks supervised by national regulators over the period 2012–2017. The main findings are that bank risk disclosure increased overall following BU but there was a weakening of disclosure by SSM-supervised banks relative to banks supervised by national authorities. We also find that the overall positive effect of the BU on bank disclosure is stronger for less profitable banks and in the most troubled economies of the Eurozone (GIPSI countries), while the negative effect on centrally supervised banks is stronger if bank CEOs act also as chairmen (CEO duality). We interpret these findings in light of the fact that the new institutional arrangements for bank supervision under which the ECB relies on local supervisors to collect the information necessary to act gives rise to inefficiencies with respect to the speed and completeness of the information flow between SSM supervised banks and the ECB, which are reflected in bank disclosure practices.

scholarly journals The Economic Crisis of 2008 and the Financial System Supervision: Towards an European Banking Union

2018 ◽  
Vol 24 (2) ◽  
pp. 45-56
Author(s):  
Evaggelia Kolovou ◽  
Grigorios Gikas ◽  
Kostantinos Kyritsis
Keyword(s):  
Banking System ◽  
Capital Requirements ◽  
Regulatory Framework ◽  
Banking Union ◽  
International Banking ◽  
Risk Capital ◽  
Prudential Supervision ◽  
European Banking Union ◽  
European Banking ◽  
The Impact

The significant repercussions of the recent crisis in the financial sector and the real economy have led to the development of policies aimed at strengthening the stability of the international banking system. Banking regulatory reforms (Basel III) improve micro-prudential supervision and involve macro-prudential supervision to avoid systemic risk. Capital requirements are tightening up and the quality of core capital is upgraded in order to provide greater coverage of losses and better risk management. In addition, a new framework for liquidity risk is introduced, as well as a complementary tool for limiting leverage. Recently, an agreement was reached in the EU to establish a Banking Union in the Eurozone, based on uniform regulation, supervision, bank clearing and deposit protection mechanisms. This framework includes a common banking capital for bank consolidation, which aims to reduce the impact on savers. This study aims to analyse the banking sector's activities and the constituent elements of the existing regulatory framework, particularly those involved in the causes of the financial crisis. It also aims to present the dimensions of the new regulatory framework for joint supervision leading to the European Banking Union and to analyse the pillars that form it, even though they are still in progress. The analysis will also build on the experiences from the recent crisis, in order to reach clear conclusions about the necessity and role of the Banking Union.

scholarly journals The European Banking Union: will it be Sufficient to Avert Another Debt Crisis in Europe?

2016 ◽  
Vol 6 (11) ◽  
pp. 15 ◽  
Author(s):  
Ross Alexander Spence
Keyword(s):  
Financial Crises ◽  
Debt Crisis ◽  
Banking Union ◽  
Member States ◽  
Single Supervisory Mechanism ◽  
European Banking Union ◽  
The Past ◽  
Single Resolution Mechanism ◽  
European Banking ◽  
Single Rulebook

<p>The rationales for the creation of the European Banking Union (“EBU”), what its objectives are and the main pillars of support for such a scheme, are worthy of investigation.  This article means to critically discuss the various elements of the EBU and determine whether the Single Supervisory Mechanism and the Single Resolution Mechanism, the main pillars underpinning the structure, are robust enough to avert another debt crisis in Europe. At the EBU’s heart lies the Single Rulebook (“SR”), which aims to counter the risk of fragmentation and nationalist tendencies. This inward looking trend became apparent in the recent financial crises, and contributed greatly to them. In an effort to avoid repeating the divisive and disjointed mistakes of the past, the SR is instead looking to provide unity and harmonisation across all participating member states. </p>

scholarly journals European Banking Union: the Impact on Financial Stability

2018 ◽  
Vol 18 (4) ◽  
pp. 123-135
Author(s):  
Cornelia Sahling ◽  
◽  
Nikolai Gusakov
Keyword(s):  
Financial Stability ◽  
Banking Union ◽  
European Banking Union ◽  
European Banking ◽  
The Impact

Justice system and corruption dog Bulgaria’s euro bid

2019 ◽  
Keyword(s):  
Banking System ◽  
Political Support ◽  
Banking Union ◽  
Waiting Room ◽  
Content Type ◽  
Eu Member States ◽  
European Banking Union ◽  
Finance Minister ◽  
European Banking ◽  
The Stability

Significance Bulgaria must also join the European Banking Union (EBU) as part of its Exchange Rate Mechanism (ERM) II bid, in order to alleviate concerns over institutional governance, economic convergence and the stability of its banking system. ERM II accession -- the ‘waiting room to the euro’ -- would bolster Bulgaria’s financial and monetary stability, and help serve as a policy anchor; Bulgaria had hoped to join this month, but Finance Minister Vladislav Goranov said in June he now hoped for entry by year-end if not before. Impacts Timing will depend on Bulgaria’s meeting the new requirement to join both ERM II and the EBU at the same time. Political support from other euro-area states could also affect the ultimate timeline. That Croatia has just applied for ERM II shows adopting the euro is still a goal, particularly for smaller EU member states.

scholarly journals The missing European Deposit Insurance Scheme

2020 ◽  
pp. 151
Author(s):  
Pery Bazoti
Keyword(s):  
Euro Area ◽  
Deposit Insurance ◽  
Banking System ◽  
Banking Union ◽  
The European Union ◽  
Risk Minimization ◽  
Insurance Scheme ◽  
European Banking Union ◽  
European Banking

The European Banking Union embarked as a highly ambitious project of the European Union as a response to the signifi cant fl aws and weaknesses in the original architecture of the European Monetary Union that became apparent during the economic crisis. However, the establishment of a single European banking system has stumbled upon the creation of a common deposit insurance scheme that could safeguard depositors and create a more stable fi nancial framework in the euro area. The European Deposit Insurance Scheme (EDIS) was fi rstly introduced by the European Commission in 2015. As a bold proposal that comprises wide risk mutualization among the euro area member states, it has spurred a vivid discussion in the European public speech and many proposals have been made since then altering its original planning in an effort to tackle the moral hazard concerns that have risen. The present article, after discussing the reasons that keep obstructing EDIS, presents these suggestions that move around, primarily, the role of the national deposit guarantee schemes. However, as highlighted in the article, before moving to any alterations on the structure and role of a proposed common deposit insurance scheme, signifi cant risk minimization on behalf of the national banking systems, must precede by limiting the sovereign exposures of banks and the size of the Non-Performing Loans. Such steps of risk minimization are critical for addressing concerns and the political unwillingness demonstrated by several European countries in moving forward towards deeper integration.

scholarly journals The Single Supervisory Mechanism in the context of a European Banking Union under construction: bridging the Euro debt crisis with defences designed for the future

2018 ◽  
Vol 4 (1) ◽  
pp. 67-77
Author(s):  
Rui do Carmo
Keyword(s):  
Debt Crisis ◽  
Banking Union ◽  
Euro Crisis ◽  
European Monetary ◽  
Single Supervisory Mechanism ◽  
European Banking Union ◽  
The Past ◽  
European Banking ◽  
Set Up ◽  
Under Construction

Set up in the past few years under the shadow of the Euro debt crisis, the European Banking Union (EBU) has been taking its first steps, aiming to prevent the dreaded repetition of the recent shortcomings of the several components of the European Monetary Union (EMU). By revisiting some specific events that led to the Euro crisis, this paper seeks to provide some insights on the understanding of the set-up of the Single Supervisory Mechanism (SSM), in the context of the broader conjunction of the several instruments put forward to provide the EBU with the resilience to prevent future crises. The text provides a brief background of the events that triggered the need for setting up the EBU, followed by an overview of its different constitutive elements and, finally, a critical analysis of the most prominent aspects of the SSM.

scholarly journals Integration of Ukraine into the European banking system: cleaning, rebooting and Basel III

2017 ◽  
Vol 12 (4) ◽  
pp. 163-174 ◽  
Author(s):  
Andriy Ramskyi ◽  
Valeria Loiko ◽  
Olena Sobolieva-Tereshchenko ◽  
Daria Loiko ◽  
Valeriia Zharnikova
Keyword(s):  
Financial Stability ◽  
Banking System ◽  
Banking Regulation ◽  
Business Environment ◽  
Basel Iii ◽  
Regulatory Changes ◽  
European Banking ◽  
National Bank ◽  
Domestic Banks ◽  
The Impact

The urgency of the issue is related to changes in the Ukrainian banks’ business environment, taking into account the impact of domestic and global financial instability and the implementation of the regulatory framework for banking regulation of the National Bank of Ukraine in accordance with the Basel Committee on Banking Supervision recommendations. The main goal of this research is to analyze the degree of implementation and compliance with the Basel III regulations in Ukrainian banking system. To carry out the research, regulatory and legislative documents of the National Bank of Ukraine, the Basel Accords, statistic data of the Ukrainian banks and the National Bank of Ukraine were used. For this purpose, the analysis of main indicators of Ukrainian banks’ financial stability within the period of 2014–2017 is made. Thus, post-crisis regulatory changes have aimed at restoring bank stability. The results seem to suggest that bank regulatory changes may be repressive, for instance, cleaning and optimization of the banking system as an effective tool for anticrisis management. As a result, it was concluded that banks with foreign capital are the most stable in the banking system of Ukraine in comparison with domestic banks.

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