Is the ‘too big to fail’ trauma still haunting us? Making sense of bank resolution after SVB and Credit Suisse

Within a time period of less than two weeks in March 2023, US banks Silvergate Capital, Silicon Valley Bank and Signature Bank failed. This was followed by the rescue merger of Credit Suisse into UBS in an effort to prevent contagion across the financial sector and avert a financial crisis that might affect the broader economy. The Credit Suisse failure in particular was a serious test of the banking regulation reforms made following the global financial crisis of 2007-09. While a 2021 evaluation by the Financial Stability Board found that ‘too big to fail’ reforms have made banks more resilient and resolvable and have produced net benefits to society, these conclusions are now fraught with doubt as a result of the inability of two large jurisdictions to deal with bank failures without taxpayer guarantees, among other factors. In addition, these recent events have cast doubt on the effectiveness of banking regulation and supervision, as was highlighted in the US Federal Reserve’s Barr report.

This webinar will look at what happened in the SVB and Credit Suisse cases and attempt to identify some of the reasons why, assessing:

• whether resolution planning is effective;
• the gaps and shortcomings of the current resolution regimes;
• what investors in bank equity, AT1 and senior debt can expect from resolution action in the future; and
• the main topics on the agenda for reform and further strengthening of resolution regimes in major financial markets including Europe, the US and beyond.