Financial Crime World

Here is the article in markdown format with proper headings, subheadings, and bullet points:

Special Measures for Bank Resolution in Greece

I can help you with that.

Additional Tools for Bank Resolution in Greece

Greece has adopted several special measures or tools to facilitate bank resolution, in addition to the bail-in tool. These include:

  • Minimum Requirement for Own Funds and Eligible Liabilities (MREL): Set at 5% of total risk exposure amount (TRE) with an additional requirement for systemically important institutions (SIIs) of 7%. G-SIIs are required to maintain an MREL of 9%.
  • Liquidity Coverage Ratio (LCR): A tool used to ensure that banks have sufficient liquid assets to meet their short-term liquidity needs.
  • Asset Separation Tool: Allows the purchaser to be an asset management vehicle, enabling the separation of healthy assets from those that are no longer viable.
  • Bridge Institution Tool: Enables the creation of a publicly controlled entity known as a bridge institution, which can purchase the failing bank and manage its operations until it is resolved.
  • Sale of Business Tool: Allows the resolution authority to transfer ownership of all or some assets, rights, or liabilities of the resolution entity to a purchaser on commercial terms without requesting the consent of the shareholders.

Restrictions on the Use of the Bail-in Tool

While the bail-in tool can be used in bank resolution, there are certain restrictions and conditions that apply. These include:

  • The bail-in tool can only be used if it is necessary to avoid significant economic disruption or prevent a serious threat to financial stability.
  • Any write-downs or conversions resulting from the exercise of the bail-in tool must not cause any loss for existing shareholders.
  • The bail-in tool can only be used if the entity under resolution has sufficient eligible liabilities.
  • In cases where the use of the bail-in tool would lead to insolvency or liquidation, it is prohibited.
  • For G-SIIs, there is a specific 9% MREL requirement.

Restrictions on the Use of the Bail-in Tool for Certain Types of Liabilities

There are restrictions on the use of the bail-in tool relating to covered deposits and secured liabilities (including covered bonds). These are excluded from the bail-in tool under Greek law.

Determining Eligibility for a Bail-in

The determination of whether a resolution entity is eligible for a bail-in will depend on the specific circumstances of each case. However, it is typically determined by the relevant resolution authority in accordance with applicable legislation. The eligibility criteria that are considered include:

  • Whether the entity under resolution has sufficient own funds and eligible liabilities.
  • The overall financial health of the entity under resolution.
  • The potential impact on the wider financial system if the bail-in were to be used.

Determining Eligibility for Assets Under a Bail-in

The determination of whether certain assets are eligible for a bail-in will also depend on the specific circumstances of each case. However, it is typically determined by the relevant resolution authority in accordance with applicable legislation. The eligibility criteria that are considered include:

  • Whether the asset in question is an own fund instrument.
  • Whether the asset is a subordinated debt.