Research Handbooks in Financial Law series
Edited by Matthias Haentjens and Bob Wessels
Chapter 13: Implications for the corporate governance structures of banks
The recent financial crisis has shown the mismatch between the tools that national and Union-level authorities had at their disposal to manage a crisis in the banking sector and the challenges arising from that same crisis, which has been described as the most serious and disruptive one since 1929. Moreover, the crisis has also exposed that general corporate insolvency procedures do not suffice for resolving credit institutions and investment firms as they do not ensure a quick and effective form of intervention, the continuation of the institution or its critical functions and the preservation of the stability of the global financial system.2 Therefore, the emphasis in the regulatory reforms has been placed on the creation of a new regime for the authorities referred to above that would provide them with common and effective tools that would enable them to intervene sufficiently early and quickly in an unsound or failing institution. These tools would also equip the authorities in a better way to ensure the continuity of the financial institution or at least its pivotal financial and economic functions, thereby minimising the impact of such a failure on (the stability of) the financial system. However, the new tools and accompanying new powers that are conferred upon the international level and national authorities in proposed frameworks have implications for the existing corporate governance structures of banks as they may interfere with shareholders’ rights, but also impede on the functioning of banks’ boards.
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