The seminar will have as a general focus the analysis and discussion of different aspects related to dealing with bank insolvency problems. Specifically, the following five main issues will be addressed:

1. Banking Sector Governance

This part of the Seminar will be devoted to discuss the institutional, legal and regulatory arrangements that should be in place in a country, to provide the best possible incentives for good governance in public and private banks and their regulatory authorities. Governance is understood in this context as the set of mechanisms for selecting, monitoring and replacing banks’ directors and managers (in the first case), and officials performing governmental duties (in the second). The effectiveness of banking regulatory and supervisory authorities can be greatly enhanced by an adequate structure of incentives for the decision-makers and staff of the official agencies responsible for carrying out those functions. Similarly, an appropriate governance framework for the banking entities permits a more transparent undertaking of the banking business, generating confidence in their counterparts and in the markets.

2. International Aspects of Financial Insolvency: Cross-border Insolvencies and the Case of Financial Conglomerates

The growth in cross-border banking activities presents a number of challenges for regulators around the world. These challenges become particularly evident in the field of cross-border insolvency. Although financial conglomerates have grown international, regulation remains nationally based, constrained by the domain of domestic jurisdictions.

3. Bank Restructuring and Resolution: Comparative Experiences

Bank restructuring is a complex process that has to be completed swiftly and thoroughly to restore public confidence in the banking system and the financial markets in the shortest possible time. The speakers and participants in the Seminar will discuss the best practices for restructuring and resolving distressed banking institutions, including resolution in the context of systemic crisis. Special emphasis will be given to the lessons that can be derived from comparative experiences.

4. An Appropriate Institutional and Legal Framework to Deal with Bank Insolvency

Country experiences with bank insolvency problems reveal the importance of having an appropriate legal framework in place before serious banking problems appear. If the problems are widespread throughout the system, the need for an appropriate institutional setting, including laws and regulation, becomes even more evident. Passing laws at times of crisis is not only an extremely difficult exercise but also a factor that increases the cost of resolving banking problems. The basic elements of the appropriate legal framework will be discussed from a comparative perspective by the Seminar’s participants.

5. Dealing with Systemic Crises

Systemic banking crises often result from widespread imprudent lending, driven by strong incentives for risk taking and connected lending. Policy responses generally involve three phases. The first includes a set of measures to stop panic and stabilize the system, the second involves measures to restructure the financial system and resolve financial institutions, and the third the normalization of the system after the restructuring is complete. The identification of the most appropriate policy responses to mitigate the costs of a crisis and minimize the probabilities of recurrence is a topic to which extensive discussion has been devoted by academics, public officers and independent experts, which still deserves much attention.

As a contribution to the analysis of the above topic, representatives from the IMF and the World Bank will discuss recent undertakings in this area in the two institutions. Afterwards, a panel of experts will present their own views and country-related experiences and, finally, an open session of questions and answers will permit to hear experiences and comments not only from the main presenters and panelists but also from all the participants in the Seminar.