Company: Clifford Chance
Category: Asset Liability Management
Published: 15 May 2013
Some (often the majority) of retail deposits will be protected through a Deposit Guarantee Scheme (DGS), and the DGS will therefore be an integral part of bank resolution. Conventional bail-in techniques assume substantial wholesale funding capable of being bailed in. However many banks today do not have these levels of funding, and if the fashion for "ring-fencing" retail deposit taking persists, the number of predominantly or exclusively deposit funded banks will increase. It is therefore necessary to consider how such institutions could be resolved, what resolution tools would be needed, and whether there are further changes required to the architecture of the financial system to ensure that institutions of this kind should exist, and, if so, whether such institutions can be efficiently and effectively resolved.