Bank Merger .pdf - How do you define bank resolution Bank Merger in Turkey Case • Withdrawal of one bank’s license or major change to the ownership

Bank Merger .pdf - How do you define bank resolution Bank...

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Bank Merger in Turkey Case: Turkey Economic Bank and Fortis Bank: Managing a Complex Merger Dr Kym Brown 1 How do you define bank resolution? Withdrawal of one bank’s license or major change to the ownership structure of a bank. A procedure to deal with an unviable bank which either dissolves it or changes its structure. 2 Source: Bolzico, J., Mascaro, Y., Granata, P. (2007) Practical guidelines for effective bank resolution, World Bank Policy Research Working Paper No. 4389, November. 3 What are the potential risks if not handled well? May cause systemic risk problems across the banking system which may spill over to other areas e.g. uncertainty issues. Creates incentives to operate well as a bank or the consequences could mean the end of a bank. Could be very costly to resolve if things go wrong. 4 Bank Resolution Management – what are the options? Bank closure and stop deposit payments Bridge bank Merger & acquisition (forced by the authorities) Open bank assistance (support with liquidity and/or capital) Government takeover of the bank (i.e. nationalization of the bank) Good Bank Bad Bank 5 Bank closure and stop deposit payments Unviable bank is closed and payment of deposits stopped
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