Early intervention option for bank resolution and recovery

05 Jun 2012

Regulators will be able to intervene early in a troubled bank in an attempt to turn it around before it goes into resolution, under proposals for a directive on bank resolution and recovery published by the European Commission on Wednesday. The draft directive also elaborated on what constitutes the point of non-viability, but gave the ultimate authority on defining such a moment to the European Banking Authority.

Under the much-delayed draft directive, regulators would have the power to intervene when a bank has breached, or is likely to have breached, capital requirements. The early intervention powers include carrying out measures from a bank’s recovery plan — a document that banks will have to have ...

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