Abstract
The growth of banks operating across national borders through branches poses problems for the regulatory and supervisory authorities, which are historically organised on a national basis, particularly in relation to their responsibility for financial stability, crisis resolution, deposit insurance and other aspects of the safety net. This article compares and contrasts two solutions to these problems that are being developed: the first by the Nordic-Baltic countries for handling Nordea, which wishes to take advantage of the European Company Statute in the legal framework of the EU/EEA, and the second by New Zealand, where most of the banks are Australian-owned. The first case reflects an attempt at a joint approach and a universalist solution that seeks greater harmonisation, while the second case reflects a territorial approach and the recognition of differences. Both show that there is already a much wider problem that needs to be addressed, even when banks operate across borders through subsidiaries. Halfway houses between internationalisation and renationalisation of responsibility seem rather less plausible routes to success, even if they are couched in terms of careful memoranda of understanding.
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A description is available on the BIS website, at: http://www.bis.org/bcbs/. Prudential regulation was initially addressed through what is known as the Basel Accord of 1988, which was updated in 2004 after protracted negotiations (with some amendments in 2005 and 2006). The new accord, labelled Basel II, was due to come into force at the end of 2007. See International Convergence of Capital Measurement and Capital Standards, BIS, June 2006. Principles for good banking supervision are enshrined in Core Principles for Effective Banking Supervision, BIS, 1997. Parallel groups exist for securities markets — the International Organization of Securities Commissions (IOSCO) — and insurance — the International Association of Insurance Supervisors (IAIS).
See International Convergence of Capital Measurement and Capital Standards, BIS, June 2006, p. 7.
The European Union has chosen to implement Basel II through the Capital Requirements Directive (CRD) (2006/48/EC and 2006/49/EC). The original Basel Accord was implemented in the Solvency Ratio Directive (89/647/EEC).
Unfortunately, the full text of MoUs are not always published, but the agreement between the Australian Prudential Regulatory Authority and the Reserve Bank of New Zealand, signed in June 2003, illustrates the form they take. See: http://www.rbnz.govt.nz/finstab/banking/supervision/0137035.html.
Basel II applies prudential standards through three main ‘pillars’. Pillar 1 relates to ‘Capital Adequacy’. This forms the bulk of the 350-page document and sets out detailed rules for how banks should hold capital against the various risks they face and how the capital and the risks should be measured. Pillar 2 provides for a ‘Supervisory Review’ under which the supervisors in the different countries involved with each bank are required to agree common standards and then assess the risk management measures being applied, requiring changes or more capital provision as appropriate. The third pillar, ‘Market Discipline’, requires banks to publicly disclose a range of information on their activities, risks and balance sheet so that investors and customers can evaluate the risks for themselves. The disclosures made to the authorities under the first two pillars remain otherwise confidential. The original 1988 Accord related just to (a simplified version of) Pillar 1.
EU legislation also applies in the wider European Economic Area (EEA).
If the host country offers better conditions for deposit insurance, the foreign bank can apply to top up its provisions for depositors in that country to that level.
Implemented in the 1989 Second Banking Coordination Directive and the 1993 Investment Services Directive.
This ‘passport’ only applies to prudential regulation. A bank must comply with the local conduct of business legislation that is in force in each Member State.
M. Schiller, Incentive Problems in Banking Supervision — the European Case, ZEW Discussion Paper 03-62 (2003), points out that this adds a horizontal, cross-border dimension to the traditional vertical principal-agent problem that can exist between the taxpayers and the regulatory authority in a single country, thereby creating an even more intractable incentive problem.
Finland’s second largest bank, Sampo, is also foreign-owned, namely by Danske Bank, and could also decide that it wished to operate as a branch. This would leave the Finnish authorities only supervising about a quarter of banking activities in Finland.
The word ‘systemic’ in this context means that if the bank were to stop operating, the spillover effects on the rest of the financial system and the economy at large would be sufficiently large and damaging that the authorities would feel obliged to step in. In other words, action would be necessary if financial stability is to be maintained. This is not simply a matter of size but of whether the institution is crucial to the smooth operation of the financial system or to the maintenance of confidence in it. There are other events short of failure that could also be systemic in their impact, but the point here is that the bank, whether in the form of a branch or a subsidiary, is thought too crucial to the smooth functioning of the financial system to be allowed to stop operating.
See E.H.G. Hiipkes, ‘Bank Insolvency Resolution in Switzerland’, in D. Mayes and A. Liuksila, Who Pays for Bank Insolvency (Basingstoke, Palgrave 2003) pp. 242–271. Although each account is mandatorily insured up to CHF 30,000 in an industry-run scheme, there is a cap on the scheme of a payout of CHF 4 billion. The legislation is silent on what will happen at this point, but clearly if there was to be any recourse to further funding the taxpayer is the likely source. The Swiss scheme also has depositor preference, with the deposit insurance fund being subrogated to the claims of the insured depositors in a failure. Thus, the chances of the fund not being able to collect in full — eventually — from the liquidation are small.
Various definitions of ‘too big to fail’ have been offered. See, for example, G. Stern and R. Feldman, Too Big to Fail: the Hazards of Big Bank Bailouts (Washington, DC, Brookings Institution 2003), but the key concern is that there can be no material interruption in the main business operations; otherwise, there will be a systemic event. This is set out in the excerpt from the New Zealand arrangements in section 3.
Report on Financial Stability, Economic Paper No. 143, European Commission, Economic and Financial Committee, May 2000; Report on Financial Crisis Management, Economic Paper No. 156, European Commission, Economic and Financial Committee, July 2001.
In its 2007 Article 4 consultation with the euro area, the International Monetary Fund concluded that ‘under the EU’s home-host supervision model, supervisors are accountable only to their national authorities, informational asymmetries between home and host supervisors are large, and actions by one supervisor have potentially large effects on the jurisdiction of another. Particularly when applied to large cross-border financial institutions (LCFI), this setting rules out efficient and effective crisis management and resolution, thus fostering moral hazard and posing unnecessary risks for national taxpayers. More proximately and immediately, the misaligned incentives that pervade the framework are also at the root of the frustratingly slow progress on the crisis prevention/supervision dimensions of the framework, e. g. on supervisory convergence — which is central to building an integrated market for financial services — and systematic information sharing.’
H. Brouwer, G. Hebbink and S. Wesseling, ‘A European Approach to Banking Crises’, in Mayes and Liuksila, supra n. 13, at pp. 205–221.
Traditionally, a major concern in the literature has been that, if a bank thinks it is too big for the authorities to let it fail, there will be a moral hazard that the bank will therefore be tempted to take bigger risks as its downside exposure is limited (e. g., Stern and Feldman, supra n. 14). Normally, this is tackled by making sure that, even though the business of the bank may continue, the shareholders can expect to be in the front line of losers and the directors and managers can expect to lose their jobs in the event of actual or near failure and hence have every incentive to avoid this outcome. In any case, there is little evidence of such risk taking among the largest US and EU banks. However, if the outcome for a cross-border bank does appear that it is too big to save, the moral hazard will be reduced.
Of the five main countries involved with Nordea as a systemic institution, only four are members of the European Union, as Norway is member of the EEA and not the European Union. Of the EU members, only Finland is a member of the euro area. Indeed each country, has a different currency, although Estonia has a currency board backed by the euro and the Danish krone is closely pegged to the euro through ERM2 (Exchange Rate Mechanism). The other three Nordic-Baltic countries, Iceland, Latvia and Lithuania, while not facing Nordea as a systemic concern, do have strong cross-border linkages in the region through branches or other banks.
T.C. Baxter, J. Hansen and J.H. Sommer, ‘Two Cheers for Territoriality: An Essay on International Bank Insolvency Law’, 58 American Bankruptcy Law Journal (2004) pp. 57–91, provide a helpful assessment of the two approaches. However, within the universal and territorial approaches to insolvency procedures, there is still quite a wide range of more detailed differences. See C. Hadjiemmanuil, ‘Bank Resolution Policy and the Organization of Bank Insolvency Proceedings: Critical Dilemmas’, in Mayes and Liuksila, supra n. 13, at pp. 272–330.
Depositors normally come low in the ranking of creditors in a bank insolvency. In the United States, however, insured depositors are ranked ahead of other unsecured creditors, although the FDIC (Federal Deposit Insurance Corporation) inherits their claims on assuming the obligation to pay out under the insurance. In the European Union, all depositors normally rank equally, irrespective of their residence or the branch in which they deposited their funds. In Australia, however, Australian depositors are ranked ahead of other depositors. This is known as domestic depositor preference. See C. Doan, V. Glanville, A. Russell and D. White, ‘Greater International Links in Banking — Challenges for Banking Regulation’, Economic Round-Up, Australian Treasury, Spring 2006, available at: http://www.treasury.gov.au/documents/1190/HTML/docshell.asp?URL=09_banking.asp. This means that New Zealand depositors in Australian banks are not only uninsured but that they are ranked after Australian depositors and hence may receive very little in an insolvency of an Australian bank. Issues of fairness aside, such an arrangement could have a large impact on the New Zealand economy and would in effect result in a subsidy from New Zealanders to Australians, something the New Zealand authorities do not favour.
Reserve Bank of New Zealand, Financial Stability Department Document BS11, October 2005, p. 2, available at: http://www.rbnz.govt.nz.
These concerns and the resulting consultations and reflections are presented in a series of papers available on the RBNZ website, at: http://www.rbnz.govt.nz/fmstab/banking/supervision/
It has been argued that the new disclosure-based regime in New Zealand in 1996 was motivated strongly by the problems with the DFC (Development Finance Corporation), which failed in 1989, and the Bank of New Zealand, the country’s largest bank, in which the government had a majority shareholding and which required major capital injections in 1990. See P. Honohan and D. Klingebiel, ‘The Fiscal Cost Implications of an Accommodating Approach to Banking Crises’, 27 Journal of Banking and Finance (2003) pp. 1539–1560; E. Kane, ‘Confronting Divergent Interests in Trans-Tasman Regulatory Arrangements’, mimeo, Boston College (July 2005). The New Zealand disclosure regime is explained in pp. 24–32 of G. Mortlock, ‘New Zealand’s Financial Sector Regulation’, 66 Reserve Bank of New Zealand Bulletin (2003) pp. 1–45. The Banking Supervision Handbook that contains the detailed regulations is available at: http://www.rbnz.govt.nz/finstab/banking/regulation/0094291.html. See also section 3 and Box 3 in particular.
Financial System Inquiry Final Report (Canberra, Australian Government Publishing Service 1997).
This may simply be overnight rather than the proverbial weekend before the bank has to reopen in its new guise on the Monday morning. Much of the traditional discussions are based on the idea that transactions are batched and deferred to the end of the day, but nowadays many operations are carried out in real time and in markets that do not close, so the effective interval for decision making may be very short.
In D.G. Mayes, L. Halme and A. Liuksila, Improving Banking Supervision (Basingstoke, Palgrave 2001) ch. 8–10 and Mayes and Liuksila, supra n. 13, ch. 1, we argue for intervention at the latest when the net worth of the bank is adjudged to be zero and at best at a small positive capital ratio, as in the United States. For a discussion of how US-style early intervention before losses mount might be implemented in the European Union, see D.G. Mayes, M. Nieto and L. Wall, Multiple safety Net Regulators and Agency Problems in the EU: Is Prompt Corrective Action Partly the Solution?, Bank of Finland Discussion Paper 07/2007 (2007).
The idea behind ‘constructive ambiguity’ is that if banks are unsure what the authorities will do when they get into difficulty, they will assume that governments will not help them and hence take extra efforts to avoid getting into difficulty in the first place. Our argument here is that they will do the exact opposite in the present EU environment. EU governments have been keen to avoid bank failures, as the actions in the Nordic crises round the beginning of the 1990s illustrate. If the authorities cannot show convincingly how such intervention will be avoided in the future, then the banks will assume that they will be bailed out as in the past, even if that is actually not what the authorities intend to do. Any government will say before the event that there will be no bail out; the question is ‘will it be believed?’.
See, for example, D. Schoenmaker and S. Oosterloo, ‘Cross-Border Issues in European Financial Supervision’, in D. Mayes and G. Wood, The Structure of Financial Regulation (London, Routledge 2007); and D. Masciandaro, ‘Allocating Financial Regulatory Powers: The Twin Views’, in Mayes and Wood, ibid., at pp. 213–231, for suggestions about how cross-border supervision might be organised.
A significant shock to an economy, which can be thought as not being the ‘fault’ of any specific group in the country, is an obvious case for governmental intervention to spread the impact across society.
J. Vesala, ‘Prudential Supervision and Deposit Insurance Issues Raised by the European Company Statute’, Colloquium on the European Company Statute, ECB, Frankfurt, 23 February 2005; ‘Towards a Lead Supervisor for Cross-Border Financial Institutions in the European Union’, European Financial Services Round Table, Brussels, June 2004.
There is one important difference between branch and subsidiary structures when a bank gets into difficulty, namely that it may be possible to concentrate the losses in a particular subsidiary and let it fail, while allowing the rest of the group to continue in a manner that would not be possible if it were organised as a single entity with branches in different jurisdictions. Thus, to some extent, the putative protection offered by the need for a subsidiary to hold its own capital can be a misleading indicator of the relative position of the two legal forms in the case of difficulty.
Larry Wall has drawn the following example to my attention. The FDIC reported in its assessment of the 1982–1983 year — available at: http://www.fdic.gov/bank/historical/managing/Chron/1983/index.html — that ’The Butcher organization, including approximately 40 loosely affiliated banks and savings and loan associations, operated in two FDIC regions and three Federal Reserve Districts. A total of seven different regulatory agencies were responsible for supervising the institutions, making the detection of problems within the combined organization extremely difficult. The insolvency of United American Bank and, subsequently, of other Butcher-related institutions, was discovered only because the FDIC undertook a simultaneous examination of the major Butcher-affiliated banks, committing to the task nearly 10 percent of its field workforce for almost three months. At the end of 1983, the FDIC estimated that its losses in connection with the eight failed Butcher banks would amount to approximately $382.6 million.’
Schoenmaker and Oosterloo, supra n. 29.
The Baltic States have a derogation and will not reach the EU minimum standard of protection until 2008. The European Commission reopened the Deposit Insurance Directive in 2004 and invited submissions on revision. Proposals for change have not followed.
Appendix 2 in A. Demirgüç-Kunt, E.J. Kane and L. Laeven, ‘Determinants of Deposit-Insurance Adoption and Design’, mimeo, World Bank (2005), provides an update of the detail on deposit insurance schemes. See also G. Garcia and M. Nieto, ‘Banking Crisis Management in the European Union: Multiple Regulators and Resolution Authorities’, 8 Journal of Banking Regulation (2005) pp. 206–226.
See J. Sigurdsson, ‘Small Countries, Large Multi-Country Banks: A Challenge to Supervisors — The xample of the Nordic-Baltic Area’, in Mayes and Liuksila, supra n. 13, at pp. 158–162.
Topping-up, of course, deletes the neatness of the match between supervisory responsibility and deposit insurance. In theory, under the strict interpretation of the home-host relationship, the host country that was providing the top-up would not be involved in the direct supervision or have any specific say in minimising the losses to the fund.
European Commission, ‘Review of the Deposit Guarantee Schemes Directive (94/19/EC)’, DG Internal Market, 14 July 2005, DGS 001/2005.
R. Eisenbeis and G. Kaufman, ‘Cross-Border Banking Challenges for Deposit Insurance and Financial Stability in the EU’, paper presented at the Bank of Finland/Journal of Financial Stability conference on Financial Stability Supervision and Central Banks, Helsinki 7–8 June 2007, available at: http://www.bof.fi/NR/rdonlyres/F92ECD28-B005-41D2-820A-EFAF6631735E/0/JFS2007_EisenbeisKaufman_paper.pdf.
Most of the discussion concerning the purchase of Antonveneta by ABN-Amro and Banco Bilbao Vizcaya Argentaria’s (BBVA) abandoned bid for Banca Nazionale del Lavoro (BNL) has been journalistic.
D.T. Llewellyn and D.G. Mayes, ‘The Role of Market Discipline in Handling Problem Banks’, in G.G. Kaufman, ed., Market Discipline in Banking: Theory and Evidence (Amsterdam, Elsevier 2003) pp. 183–210, identify ten stakeholders who could have the incentive both to monitor and to take action to discipline banks through various markets: depositors, managers, borrowers, supervisory agencies, rating agencies, market traders, shareholders, boards of directors, debt holders and employees. See also R. Bliss and M. Flannery, Market Discipline in the Governance of US Bank Holding Companies: Monitoring vs. Influencing, Federal Reserve Bank of Chicago Working Paper 2000–3 (2000).
Even the new Pillar 3 of Basel II is not insisting on standards of disclosure that are as relevant as those that have been required since 1996 in New Zealand. See Mayes, Halme and Liuksila, supra n. 27, for a discussion of the disclosure requirements and the appendix to chapter 7 for an example of a general disclosure document (made by Deutsche Bank).
The indications in New Zealand are that various aspects of the disclosure regime have been very effective. Making directors legally responsible for the disclosures has helped ensure that they apply sufficient effort to ensuring their accuracy. Disclosure has also helped sharpen competition, and market structure has changed quite considerably in the last ten years, with a number of acquisitions.
R.A. Eisenbeis and L.D. Wall, The Major Supervisory Initiatives Post FDICIA: Are They Based on the Goals of PCA? Should They Be?, Federal Reserve Bank of Atlanta Working Paper 2002–31(2002).
See, for example, the Bank of Finland Financial Stability Review for 2005 and H. Koskenkylä, ed., Financial Integration, Bank of Finland Study A: 108 (2004).
The requirements for PCA in the United States are set out in Mayes, Nieto and Wall, supra n. 27.
That is to say, to avoid forbearance.
R.T. Helfer, ‘What Deposit Insurance Can and Cannot Do’, Finance and Development (March 1999) pp. 22–25. Helfer was Chairman and CEO of the FDIC from 1994 to 1997.
T.G. Moe, J.A. Solheim and B. Vale, The Norwegian Banking Crisis, Norges Bank Occasional Paper (Oslo, 2004) p. 33.
G. Hoggarth, J. Reidhill and P. Sinclair, ‘Resolution of Banking Crises: Theory and Evidence’, mimeo, Bank of England (2002), produce a neat list of the available options for bank assistance.
T. Padoa-Schioppa, Regulating Finance: Balancing Freedom and Risk (Oxford, Oxford University Press 2004), argues that peer pressure might be rather successful in the European environment in ensuring that supervisors actually conform to the rules they set themselves.
T. Beck, ‘The Incentive-Compatible Design of Deposit Insurance and Bank Failure Resolution: Concepts and Country Studies’, in Mayes and Liuksila, supra n. 13, at pp. 118–141.
Schoenmaker and Oosterloo, supra n. 29. The number is a little larger than the nine ‘European’ banks shown in the first category of the table, but a number less than twenty sounds plausible even allowing for banks with a very uneven country coverage.
Many of the other Member States are not under similar pressure to find a rapid solution, as they do not face similar systemic concerns. It is not clear when — if ever — an EU-wide agreement will be reached.
D. Mayes, ‘The Role of the Safety Net in Resolving Large Financial Institutions’, paper prepared for conference on Systemic Bank Crises: Resolving Large Bank Insolvencies, Federal Reserve Bank of Chicago, 1 October 2005; D. Mayes, ‘Preparing for Cross-Border Bank Failures’, 11 The Financial Regulator (2004) pp. 58–63.
At European level, therefore, this might imply assigning the role of resolution agency to the ECB.
W. Bagehot, Lombard Street: A Description of the Money Market (London, Henry S. King and Co. 1873).
Moe, Solheim and Vale, supra n. 50, give a good range of examples from the Nordic crises.
M. King, ‘Debt Deflation: Theory and Evidence’, 38 European Economic Review (1994) pp. 419–455.
As set out in Stern and Feldman, supra n. 14, for example.
The Swiss system is set out and explained in Hiipkes, supra n. 13.
For a description of the position of Italy, see L. Wall and M.J. Nieto, ‘Institutional Preconditions for a Successful Implementation of Supervisors’ Prompt Corrective Action: Is There a Case for a Banking Standard in the EU?’, mimeo, Banco de Espana and Federal Reserve Bank of Atlanta (2005).
See Hadjiemmanuil, supra n. 20, for a clear exposition of the issues and arguments in favour of the ‘London approach’, whereby the interested parties, assisted by the authorities, have proved themselves able to achieve rapid effective solutions through the courts.
European Shadow Financial Regulatory Committee, ‘Reforming Banking Supervision in Europe’, Statement No. 23, 21 November 2005, tries to cut through the legal difficulties by suggesting the formation of a European Standing Committee for Crisis Management that would bring together representatives of the national central banks, supervisory authorities and ministries of finance involved to manage the problem. But while they could resolve cross-border conflicts, the national authorities would still be bound by the prevailing law.
See Mayes, Halme and Liuksila, supra n. 27, at pp. 198–255. The detail is not repeated here.
In systemic cases, the overall objective is to minimise the loss to the country at large by avoiding systemic consequences to the greatest extent possible. Nevertheless, in seeking to resolve the individual bank, given the overriding intention of keeping it operating, the traditional approaches of trying to maximise the value of the bank or trying to minimise the loss to the deposit insurance in the framework we have outlined might be similar, given that a taxpayer bailout of the existing shareholders is ruled out.
P. Aghion, O. Hart and J. Moore, ‘The Economics of Bankruptcy Reform’, 8 Journal of Law, Economics and Organization (1992) pp. 523–546.
Clearly, other aspects of ‘fairness’ also need to apply. I am grateful to Larry Wall for pointing out that the scheme should be fair in the ex ante sense of dealing with people as they expect from the nature of their contracts. This is to be distinguished from ex post fairness, in which governments might wish to take a view on how burdens are distributed across society irrespective of their contractual incidence.
I. Harrison, ‘The Reserve Bank of New Zealand’s Bank Creditor Recapitalization (BCR) Project: An Option for Resolving Large Banks’, paper prepared for conference on Systemic Bank Crises: Resolving Large Bank Insolvencies, Federal Reserve Bank of Chicago, 1 October 2004. Harrison argues that only a limited portion of claims need to be dealt with immediately, as most do not mature on the same value day and will not be subject to a disorderly rush for early closure thereafter if the new bank is guaranteed against further loss by the authorities.
In some markets and contracts, a simple downgrading of creditworthiness entitles counterparties to terminate their contracts prematurely. Should this occur with a large institution or one that has substantial market share, it could have an important effect on asset prices and spill over into the rest of the financial system.
E. Hiipkes, ‘“Too big to save” Towards a Functional Approach to Resolving Crises in Global Financial Institutions’, paper prepared for conference on Systemic Bank Crises: Resolving Large Bank Insolvencies, Federal Reserve Bank of Chicago, 1 October 2004.
For a cautious assessment, see B. Blowers and G. Young, ‘The Economic Impact of Insolvency Law’, in Mayes and Liuksila, supra n. 13, pp. 164–179.
In the US case, the FDIC is involved in the continuing supervision of institutions, so the issue becomes the point at which they realise they have to step up their surveillance as the bank approaches difficulty.
See D. Mayes, ‘Who Pays for Bank Insolvency in Transition and Emerging Economies’, 29 Journal of Banking and Finance (2005) pp. 161–181.
Hiipkes, supra n. 13, at p. 251.
See, for example, the suggestions in European Shadow Financial Regulatory Committee, supra n. 65.
See Reserve Bank of New Zealand, Financial Stability Report (May 2005).
Large banks are not defined by market share but by absolute size, namely, as those having New Zealand liabilities, net of amounts due to related parties in excess of NZD 10 billion.
For a more detailed exposition of the New Zealand regime, see also Mayes, Halme and Liuksila, supra n. 27, ch. 7. Mortlock, supra n. 24, at pp. 5–49, gives the picture for the whole system, and L. DeSourdy, ’The Reserve Bank of New Zealand Amendment Act 2006, 69 Reserve Bank of New Zealand Bulletin (2006) pp. 22–25, explains the recent changes. A. Yeh, J. Twaddle and M. Frith, ‘Basel II: A New Capital Framework’, 68 Reserve Bank of New Zealand Bulletin (2005) pp. 4–15, covers Basel II.
Reserve Bank of New Zealand, Financial Stability Department Document BS11, October 2005, p. 2, available at: http://www.rbnz.govt.nz,.
See: http://www.rbnz.govt.nz/finstab/banking/supervision/0137035.html (My 2003).
Kane, supra n. 24, provides a comparison of Australian and New Zealand regulatory ‘cultures’. This reveals several fundamental differences, starting with institutional scope. There is a clear mismatch between the various agencies in the two countries over which institutions and which functions they regulate, which in itself makes a dialogue difficult, as it is not a straightforward dialogue between parallel agencies.
These incentives and obligations to disclose extend to auditors (Kane, supra n. 24), who have to report to the RBNZ any suspicions they have about solvency problems or concerns about whether the information provided represents a ‘true and fair view’.
The circumstances are set out in D.G. Mayes and G.E. Wood, ‘Lessons from the Northern Rock Episode’, paper presented at conference on Bank and Finance: The Impact of Global Threats, University of Lille 1, 12 March 2008.
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The normal disclaimer applies, the views expressed are those of the authors and do not necessarily coincide with any that may be held by the Bank of Finland, the Finnish Financial Supervision Authority or the Finnish Deposit Insurance Fund. We are grateful to David Archer, Charles Goodhart, Maria Nieto and Larry Wall for constructive comments.
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Mayes, D.G., Granlund, P. Polar Approaches to Regulating Cross-Border Banking: Nordic and Antipodean Routes to Financial Stability. Eur Bus Org Law Rev 9, 63–95 (2008). https://doi.org/10.1017/S1566752908000633
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DOI: https://doi.org/10.1017/S1566752908000633