Subsidiaries or Branches: Does One Size Fit All?

 
Author/Editor: Fiechter, Jonathan ; Ötker, Inci ; Ilyina, Anna ; Hsu, Michael ; Santos, Andre ; Surti, Jay
 
Publication Date: March 01, 2011
 
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Summary: This study proposes to make an assessment of the trade-offs emanating from the adoption of the stand-alone subsidiarization (SAS) model of global banking. In the aftermath of the global financial crisis, the United Kingdom Financial Services Authority (FSA) proposed SAS as a possible practical avenue to lessen risk of contagion of macro-financial problems by re-organizing internationally active banks into financially self-sufficient, independently management constellations. While SAS exerts a potential stabilizing influence on global financial markets by containing financial sector dislocation at its point of origin, its costs—in terms of potential decrease in global capital flows, a discrete change in financial institutions’ business models and returns, and risk management capacity of globally active institutions—may be substantial. The paper will assess the distribution of these benefits and costs across various stakeholders—home and host countries and the financial institutions—at different points in the business cycle. It will also examine whether some intermediate solutions recently proposed by the Fund provide a more practical way forward in view of the cost-benefit analysis of SAS.
 
Series: Staff Discussion Notes No. 11/4
Subject(s): Financial stability | Bank supervision | Banks | International banking

Author's Keyword(s): Cross-border banking | financial stability | financial regulation | stand-alone subsidiarization | ring-fencing | subsidiary model | branch model | resolution | banking structure | too big to fail
 
English
Publication Date: March 01, 2011
ISBN/ISSN: 9781455288564 Format: Paper
Stock No: SDNEA2011004 Pages: 29
Price:
US$20.00 (Academic Rate:
US$20.00 )
 
 
English
Publication Date: March 01, 2011
ISBN/ISSN: 978-1-61635-040-6 / 2072-3202 Format: A web quality merged PDF
Stock No: SDNET2011004 Pages: 29
Price:
Free
 
 
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