This dissertation was written as part of the LL.M. in Transnational and European Commercial Law, Banking Law, Arbitration/Mediation at the International Hellenic University.
The study provides an overview of the bail-in not only as a resolution tool per se, but more so as a shift of perspective of who must bear the costs and responsibility of reviving an ailing institution, especially in the EU, under the harmonized set of rules of the Bank Recovery and Resolution Directive (BRRD). The Resolution framework has entered into force on 1 January 2015, while the respective bail-in procedures are applicable for all member states since 1 January 2016. Bearing in mind the respective arguments deriving from scholars and leading industry delegates, this work aims at assessing the rationale of the bail-in tool and the goals it seeks to achieve under the relevant regime. In particular an evaluation from a legal and socioeconomic point of view will be undertaken to determine whether the departure from the recent practice of public bail-outs can be an effective strategy to satisfy public policy considerations of utmost importance; namely to preserve and restore the financial institutions’ critical economic functions at the expense of the associated fundamental property rights of its stakeholders; Its creditors and shareholders.
In another chapter of the study, bail-in is examined in the context of burden sharing and by reviewing recent live cases it highlights the controversial decisions of the authorities regarding the provision of state aid to distressed banks. To that end, special attention is given to the interconnectedness and friction of the Resolution framework with the State aid framework whereby authorities of the relevant member states manipulated in many instances the respective frameworks merely to accommodate political pursuits. The systemic exception of precautionary recapitalisations is also examined in that context.
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