18

result(s)

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"Total Assets" versus "Risk Weighted Assets": Does it Matter for MREL Requirements?

04-07-2016

Using a comprehensive sample of European banks by business model, ownership structure and systemic footprint, we calculate MREL requirements based on three hypotheses: i) 18% of RWA; ii) 6.75% of LRE; iii) EBA- RTS. The maximum of i) and ii) TLAC prescription – reveals different requirements across business models/ownership structures not in favour of traditional banking. Variations are reduced somewhat with EBA RTS and an 8% floor. Shocking banks in respect of tail risk events suggests that currently ...

Using a comprehensive sample of European banks by business model, ownership structure and systemic footprint, we calculate MREL requirements based on three hypotheses: i) 18% of RWA; ii) 6.75% of LRE; iii) EBA- RTS. The maximum of i) and ii) TLAC prescription – reveals different requirements across business models/ownership structures not in favour of traditional banking. Variations are reduced somewhat with EBA RTS and an 8% floor. Shocking banks in respect of tail risk events suggests that currently envisaged MREL levels might be insufficient for a smooth resolution for banks.

External author

Rym Ayadi and Giovanni Ferri

Carving Out Legacy Assets: A Successful Tool for Bank Restructuring?

15-03-2017

This paper drafted under supervision of the Economic Governance Support Unit considers a number of issues related to the restructuring of troubled banks in the EU. First, we provide an overview of how legacy assets have been dealt in a number of countries (drawing in particular upon the experience in Japan, the USA, Sweden and Spain), which support the case for a centralized solution in the presence of a generalized banking crisis. Second, we shed light on the need to differentiate between systemic ...

This paper drafted under supervision of the Economic Governance Support Unit considers a number of issues related to the restructuring of troubled banks in the EU. First, we provide an overview of how legacy assets have been dealt in a number of countries (drawing in particular upon the experience in Japan, the USA, Sweden and Spain), which support the case for a centralized solution in the presence of a generalized banking crisis. Second, we shed light on the need to differentiate between systemic and non-systemic events by examining the relevant literature on the credit channel. Third, we elaborate the theoretical argument on the need for a systematic centralised approach at the EU level to deal with legacy assets in bank restructuring to maintain fair recovery rates. Finally, we provide a preliminary assessment of the business models, risk, response to regulation and performance of 38 state aided banks via recapitalisation measures and explicit restructuring requirements with an emphasis on APS-AMC arrangements using available data between 2005 and 2015. The indicators show that these state aided banks are returning progressively to soundness and struggling to regain performance levels of the pre-crisis period, which is a generalised problem of the European banking sector.

External author

Rym Ayadi, Giovanni Ferri and Rosa M. Lastra

The Different Legal and Operational Structures of Banking Groups in the Euro Area, and their Impact on Banks’ Resolvability

29-11-2016

This paper discusses the legal and operational structure of the 129 banking groups in the euro area, which meet the test of SSM significance. Following a brief consideration of some key definitional and theoretical aspects, the paper analyses the data available from those 129 groups under a tri-dimensional taxonomy (considering their institutional, organizational, and operational structure). Based upon such data and taxonomy, the paper poses a number of questions or issues that the Single Resolution ...

This paper discusses the legal and operational structure of the 129 banking groups in the euro area, which meet the test of SSM significance. Following a brief consideration of some key definitional and theoretical aspects, the paper analyses the data available from those 129 groups under a tri-dimensional taxonomy (considering their institutional, organizational, and operational structure). Based upon such data and taxonomy, the paper poses a number of questions or issues that the Single Resolution Board might consider in their resolvability assessments in the light of the Bank Recovery and Resolution Directive and the SRM regulation. The paper outlines avenues for further research since greater clarity is needed to understand both legal and operational structures of banking groups in the euro area. This paper was requested by the European Parliament under the supervision of its Economic Governance Support Unit.

External author

Rosa M. Lastra, Rym Ayadi, Rodrigo Olivares-Caminal and Costanza Russo

EU Policies in Tunisia before and after the Revolution

21-04-2016

This study investigates the evolution and potential impacts of EU policies in Tunisia before and after the Revolution using an innovative analytical framework. To do that, the most important milestones in the frameworks of cooperation agreed between the EU and Tunisia and the policies implemented, are described. The impact of such policies before the Revolution and their subsequent evolution, are analysed to highlight the causes and the consequences of the shifting approach of the EU towards Tunisia ...

This study investigates the evolution and potential impacts of EU policies in Tunisia before and after the Revolution using an innovative analytical framework. To do that, the most important milestones in the frameworks of cooperation agreed between the EU and Tunisia and the policies implemented, are described. The impact of such policies before the Revolution and their subsequent evolution, are analysed to highlight the causes and the consequences of the shifting approach of the EU towards Tunisia. Finally, the analysis is complemented with inputs collected via a consultation from key participants across the Tunisian political and civil society landscape. In the pre-Revolution period, EU relations with Tunisia were narrowed down to an exchange of commercial, financial and strategic interests, in line with most development aid programmes across the world. The Tunisian Revolution brought two fundamental dynamics – democratisation and destabilisation – which had broad repercussions on the relations between Tunisia and the EU. These dynamics enhanced the probability of more synergies and complementarities between the two partners’ political projects and the necessity to strengthen financial support, providing the EU with a window of opportunity for enhanced cooperation, underlined in a win-win philosophy, co-development and deeper integration.

External author

Rym AYADI (International Institute for Cooperatives at HEC Montreal and Founding President of the Euro-Mediterranean Economists Association - EMEA) and Emanuele SESSA (Euro-Mediterranean Economists Association)

State Aid to Banks and Credit for SMEs: Is There a Need for Conditionality?

16-02-2015

This study assesses whether a condition which requires ailing banks or groups of ailing banks that receive State aid to maintain or to provide additional access to finance small and medium-sized enterprises legally justified and economically beneficial. The relevant cases have been examined and the link to SME lending has been analysed in a qualitative and a quantitative way. An overview table of the cases analysis is provided in the Annex. This study was prepared by Policy Department A at the request ...

This study assesses whether a condition which requires ailing banks or groups of ailing banks that receive State aid to maintain or to provide additional access to finance small and medium-sized enterprises legally justified and economically beneficial. The relevant cases have been examined and the link to SME lending has been analysed in a qualitative and a quantitative way. An overview table of the cases analysis is provided in the Annex. This study was prepared by Policy Department A at the request of the Committee on Economic and Monetary Affairs (ECON).

External author

Rym AYADI (CEPS), Willem Pieter DE GROEN (CEPS) and Peter THYRI (Vienna University of Business Economics, Austria)

Small and Medium Sized Enterprises (SMES) in the Southern Mediterranean

26-01-2012

In the Southern Mediterranean, micro, small and medium sized enterprises (MSMEs) represent a substantial share of registered companies and employ 25% of the labour force. In Egypt, Jordan, Morocco and Tunisia, MSMEs are concentrated in trade, light manufacturing and textiles. Widespread informality, corruption, insufficiently skilled labour force and difficulties in access to finance stand as the major obstacles faced by the region’s small businesses. EU’s and Member States development assistance ...

In the Southern Mediterranean, micro, small and medium sized enterprises (MSMEs) represent a substantial share of registered companies and employ 25% of the labour force. In Egypt, Jordan, Morocco and Tunisia, MSMEs are concentrated in trade, light manufacturing and textiles. Widespread informality, corruption, insufficiently skilled labour force and difficulties in access to finance stand as the major obstacles faced by the region’s small businesses. EU’s and Member States development assistance flows have addressed these concerns only partially: between 1995 and 2009, aid flows for MSMEs accounted for 10% of total development assistance and was split among a high number of initiatives, lacking a coherent strategy. The challenge of job creation has been highlighted by the 2011 upheavals and puts MSMEs at the centre of future economic strategies. In the context of the renewed European Neighbourhood Policy, this note focuses on Egypt, Jordan, Morocco and Tunisia and has four objectives. First, it seeks to provide with a description of MSMEs in these countries, their contribution to employment, the sectors in which they are active as well as the constraints they face. Second, it moves on to assess both EU’s and Member States’ development assistance commitments for MSME support. Third, it provides with a picture of foreign direct investments (FDI) and partnerships concluded between European and Egyptian, Jordanian, Moroccan and Tunisian SMEs. Fourth, it reviews the visa policies applying for business persons in the region. Finally, it provides with recommendations to support the development of MSMEs within the framework of the Euro-Mediterranean Partnership.

External author

Rym AYADI (CEPS, Brussels, Belgium)

Overview of external briefings on the SSM and SRB during the 8th parliamentary term

06-09-2019

To facilitate the parliamentary scrutiny work, the Committee on Economic and Monetary Affairs (including its Banking Union Working Group) has drawn on external experts to provide briefings on topics of relating to both the SSM and SRM. Prior to December 2015, experts had been requested on an ad-hoc basis, while thereafter, ECON could draw on expertise from two standing panels of experts, one panel for supervisory issues, the other for questions related to bank resolution. Topics for the panel of ...

To facilitate the parliamentary scrutiny work, the Committee on Economic and Monetary Affairs (including its Banking Union Working Group) has drawn on external experts to provide briefings on topics of relating to both the SSM and SRM. Prior to December 2015, experts had been requested on an ad-hoc basis, while thereafter, ECON could draw on expertise from two standing panels of experts, one panel for supervisory issues, the other for questions related to bank resolution. Topics for the panel of experts to be provided in advance of each public hearing are chosen by ECON Coordinators. Since their inception, the two standing panels have in total provided 56 concise written briefing papers on 20 different topics.

Forces of Reform and Education Systems of GCC Countries

25-10-2010

Social change and transformation in the GCC countries is only possible with the active internal involvement of citizens in political and social dialogue, leading to a coordinated and gradual “change from within”. However, having been led by autocratic rulers for centuries, the region’s citizens lack the resources and understanding of political mobilisation and responsibility. An educational system that delivers real outcomes can broaden the economic and social opportunities of its citizens, empowering ...

Social change and transformation in the GCC countries is only possible with the active internal involvement of citizens in political and social dialogue, leading to a coordinated and gradual “change from within”. However, having been led by autocratic rulers for centuries, the region’s citizens lack the resources and understanding of political mobilisation and responsibility. An educational system that delivers real outcomes can broaden the economic and social opportunities of its citizens, empowering and preparing them to assume their role as “agents of change” while reinforcing their social and intellectual development. Although the GCC countries have come a long way in enhancing enrolment and literacy rates, the region’s educational systems still suffer from low quality, misaligned incentives, lack of public accountability, inability to provide the skills needed in the market, and equipping pupils with critical thinking capacities. The EU has to a take more active role in providing assistance and sharing its know-how, instead of narrowly focusing on venues of cooperation in higher education, typically oriented for industrialised nations.

External author

Rym AYADI (Senior Research Fellow, CEPS)

Relations between EU & Gulf Cooperation Council (GCC) Countries

25-10-2010

Relations between the EU and the Gulf Cooperation Council (GCC) countries have failed to materialize into a deep partnership. After twenty years of talks, the FTA is still not concluded. Although the GCC would benefit most from trade liberalization with the EU, its reluctance to commit to economic reforms reinforcing openness and transparency prevents the negotiations to come to an end. At the same time, France, Germany and UK relations with GCC countries are relatively more developed with high levels ...

Relations between the EU and the Gulf Cooperation Council (GCC) countries have failed to materialize into a deep partnership. After twenty years of talks, the FTA is still not concluded. Although the GCC would benefit most from trade liberalization with the EU, its reluctance to commit to economic reforms reinforcing openness and transparency prevents the negotiations to come to an end. At the same time, France, Germany and UK relations with GCC countries are relatively more developed with high levels of weaponry supply and support on security grounds, albeit non comparable to the American involvement in the region.

External author

Rym AYADI (Senior Research Fellow, CEPS)

Workshop on Consumer Protection in Financial Services - Presentations and Briefing Notes

16-02-2009

The focus of this workshop was on how far information and education should be the responsibility of financial instituitions and secondly the measures available to consumers in case of malpractice.

The focus of this workshop was on how far information and education should be the responsibility of financial instituitions and secondly the measures available to consumers in case of malpractice.

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