The European Banking Authority (EBA) has launched a set of new regulations which dictates the terms and conditions for closing an unsound or failed bank.
The new rules will ensure that the troubled banks would be shut down without disrupting markets or calling on taxpayer money, as reported by Reuters.
Go deeper with GlobalData
Set for public consultation, the European Union’s banking watchdog draft guidance flesh out one aspect of a new EU law on dealing with troubled banks without requiring government money, according to the publication.
The EU financial regulators want to swiftly close down the bank failing or on the verge of the failure, so to thwart any possible interruption to customers and markets that was seen after the collapse of US bank Lehman Brothers in September 2008.
The EBA said in a statement, "The guidelines do not prescribe or privilege certain business models or organizational structures but allow for a case-by-case analysis of the impediments caused by the institution or group and of the best way to address them."
The EBA noted that the banks under the new EU law will need to be credible and feasible, with structural changes imposed as per the demand of the situation.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe guidance, which is scheduled to come in force from the middle of 2015, has no fixed deadline for banks to remove obstacles to resolution.
