Structural banking reforms and their implications for banks’ corporate governance

Christiane Hellstern

Journal of Financial Regulation and Compliance, 2019, vol. 28, issue 4, 515-525

Abstract: Purpose - The purpose of this paper is to examine from a comparative perspective, the impact of structural banking reforms on the legal frameworks for the corporate governance of credit institutions. Design/methodology/approach - This facilitates a functional analysis of the resulting corporate governance structures, which in turn provides the basis for an analysis of conceptual concerns with regard to the independence of the separate entity. Findings - The paper points out that structural banking reforms come with significant implications for existing corporate governance structures of credit institutions. The resulting corporate governance structures rise conceptual concerns with regard to both the effectiveness of the independence of the separate entity and the objectives of structural banking reforms generally. Practical implications - The paper shows that the implementation of structural banking reforms is a complex operational issue and process for the banking groups and the regulators. The challenge will be to establish and upheld the ring fence in a way to lower the risk of intra-group contagion. There is a great need for regulatory and supervisory policies that reinforce the settled ring fence obligations. Originality/value - This paper’s value lies in providing analysis of the implications of structural banking reforms for the corporate governance of credit institutions. The relevant statutory frameworks as such set only the core components of the new structure. Defining and implementing the design is left to the discretion of the regulators.

Keywords: Corporate governance; Financial regulation; Ring-fencing; Liikanen report; Structural banking reform; Vickers commission (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-04-2018-0058

DOI: 10.1108/JFRC-04-2018-0058

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