Yashchenko K.Y. Legal framework for transferring assets and liabilities in bank failure management. – Scientific qualification work with the manuscript copyright.
The dissertation for the degree of Doctor of Philosophy, Specialty 081 «Law» (08 – Law). – National University of Kyiv-Mohyla Academy, Kyiv, 2024.
The dissertation is devoted to the legal regulation of tools for transferring assets and liabilities in bank failure management and aims to contribute to the current scientific discourse on ways to improve bank crisis management frameworks.
The dissertation describes formation, current state and development trends in bank failure management regimes worldwide. It draws upon diverse scientific literature, alongside recommendations the Basel Committee on Banking Supervision, Financial Stability Board, International Association of Deposit Insurers, International Monetary Fund, World Bank. Moreover, it scrutinizes the legislative frameworks and their application within three distinct legal jurisdictions: the United States, which employs a unified approach for the management of failed banks («single-track regime»); EU, which adopts a strategy allowing for a special regime in instances where a bank's withdrawal is deemed to be in the public interest, and standard corporate insolvency legislation otherwise («dual-track regime»); and Ukraine which maintains a unified approach yet is committed to aligning with EU legislation.
Drawing upon international practices, this dissertation examines the entire system of bank failure management tools, from which the author distinguishes those tools which provide for the transfer of assets and liabilities of the failed bank. These include a transfer of assets and liabilities in favour of an assuming bank, a bridge bank, and an asset separation tool. The principles of choosing a particular tool in Ukraine and other jurisdictions are also explored. An in-depth examination of the Deposit Guarantee Fund’s practice of managing banks failures from 2012 (when relevant powers were vested in the Deposit Guarantee Fund) to 2023 reveals a limited application of tools other than liquidation. Only in ten cases other tools were used. The study identifies the factors influencing such choice of bank failure management tools.
The dissertation examines the concept and practice of application of the transfer of assets and liabilities of a failed bank in favour of an assuming bank, including the definition, objectives and prerequisites for its application, the powers that should be vested in the resolution authority to apply the tool, procedure for identifying the assets and liabilities to be transferred. Further, the analysis reviews requirements for assuming banks, alongside the advantages and disadvantages associated with employing this tool. Conclusively, the author argues that effective legal regimes shall provide for the transfer of assets and liabilities of a failed bank in favour of an assuming bank, not solely in cases when the bank failure management is regarded as a public interest.
The dissertation examines the concept and practice of application of the bridge bank tool, including the definition of the bridge bank, objectives and prerequisites for its application, the powers that should be vested in the resolution authority to apply the bridge bank tool, requirements for the bridge bank, its ownership structure and capitalization, as well as merits and potential drawbacks of the tool. The conclusion drawn suggests that, contrary to the predominant viewpoint which reserves the use of bridge banks for complex cases (mainly systemically important banks), this tool holds potential applicability for small and medium-sized banks as well, as evidenced by the successful practice of its application. At the same time, the legal framework should ensure that application of the bridge bank tool aligns with the overarching objectives of the bank failure management process and adheres to the principles guiding the choice of the bank failure management tool.
The results of the dissertation were highly appreciated by the Capital & Financial Market Development Department of the European Bank for Reconstruction and Development and used in preparing the department’s program. Suggestions and recommendations were used when providing technical assistance on improving legal frameworks at the EBRD’s countries of operation.
Keywords: insolvency, bank, banks, credit, deposit, household deposit guarantee, transfer of assets and liabilities, transfer of rights, assignment of claims, separation, protection, protection of rights, liability, legal certainty, civil law policy.
