Public funding of failing banks in the European Union (LBF vol. 19) 2020/4.4.3.3:4.4.3.3 The asset separation tool

Public funding of failing banks in the European Union (LBF vol. 19) 2020/4.4.3.3

4.4.3.3 The asset separation tool

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

Th asset separation tool entails the power of a resolution authority to transfer assets, rights or liabilities of a bank in resolution or a bridge institution to one or more asset management vehicles.1 The asset separation tool may only be applied, if (a) the situation of the particular market for those assets is of such a nature that the liquidation of those assets in normal insolvency proceedings could have an adverse effect on one or more financial markets, (b) such a transfer is necessary to ensure the proper functioning of the bank in resolution or bridge institution, or (c) such a transfer is necessary to maximize liquidation proceedings.2 The asset separation tool may only be applied together with another resolution tool.3

An asset management vehicle is a legal person that is (i) wholly or partially owned by one or more public authorities which may include the national resolution authority or the national resolution fund and is controlled by the resolution authority, and (ii) created for the purpose of receiving some or all of the assets, rights or liabilities of one or more banks in resolution or a bridge institution.4 An asset management vehicle manages the assets transferred to it with a view to maximising their value through eventual sale or winding up in an orderly manner.5 The resolution authority approves the asset management vehicle’s constitutional documents, management body and their remuneration and responsibilities, strategy and risk profile.6 The application of the asset separation tool is discussed in more detail in section 4.5.3.

So far, the asset separation tool has been used by national resolution authorities in Hungary, Italy, Portugal and Croatia.

Following the sale of loan claims by MKB Bank under the application of the sale of business tool, assets which were indicated to be divested but could not be sold due to a lack of potential buyers on the market were transferred to MKB Pénzügyi Zrt. for the purpose of encouraging the implementation of the asset separation tool. The shares in MKB Pénzügyi Zrt. were transferred to the Hungarian Resolution Property Management Private Company (the Resolution Company).7

In Italy, the asset separation tool was applied to Banca Marche, Banca Etruria, Carife and Carichieti in combination with the bridge institution tool. The bad loans were transferred to an asset management vehicle.8

In Portugal, the asset separation tool was used in combination with the sale of business tool in relation to BANIF. Some of BANIF’s assets were transferred to an asset management vehicle specifically set up for this purpose. This asset management vehicle was set up by Banco de Portugal to receive and manage the rights and obligations transferred, with a view to their subsequent sale or liquidation.9

In Croatia, the asset separation tool was used in combination with the sale of business tool in relation to Jadranska Banka. The Croatian resolution authority established a special purpose vehicle (SPV) to manage the non-performing assets of Jadranska Banka. On 31 December 2016, this SPV purchased non-performing assets at the market economic value of the concerned assets.10

Deze functie is alleen te gebruiken als je bent ingelogd.