The last couple of years, financial conglomerates have been established all over Europe. This horizontal diversification has not only attracted a great deal of attention in the banking and insurance sector but has also alarmed the supervisory authorities and the European Commission. Although the benefits of financial conglomerates are straightforward, it is clear that quite a number of potential risks can not be ignored. Since the phenomenon of "financial conglomeration" is rather new, the regulators do not possess a great deal of objective, scientific reference bases on which to construct the necessary regulations. Moreover the complexities and specific char acteristics of the financial conglomerates do not permit a simple extrapolation of the rules for industrial conglomerates. Even the extrapolation of banking regula tions to insurance groups and vice versa poses a lot of difficult questions. These observations lie at the origin of the research carried out at the Erasmus Finance and Insurance Centre (EPIC at the Erasmus University in Rotterdam), in collaboration with the Impulse Centre for Financial Services and Insurance (ALEA at the Vlerick School of Management of the University of Ghent). To confront the research results with the expertise of the business world and the supervisory authorities a workshop was organised in Rotterdam (1994). This publication is partly based on these research results and the workshop discussions. Three main blocs can be distinguished: the definition of financial conglomerates; the potential risks and the regulatory aspects; the strategic issues.
Inhaltsverzeichnis
1. Defining financial conglomerates Combining economic and legal approaches. - 1. 1. The essential elements that constitute a financial conglomerate. - 1. 2. Defining a group of enterprises. - 1. 3. Defining financial institutions and financial activities. - 1. 4. What distinguishes a financial conglomerate from a financial institution? . - 1. 5. Complementarity between the activities and institutions involved. - 1. 6. A financial conglomerate is not really a conglomerate in the economic sense of the word. - Appendix 1. A. Relevant definitions. - A. 1. Defining a group. - A. 2. Defining a daughter company or subsidiary. - A. 3. Defining a participation. - A. 4. Defining an associated or related enterprise. - A. 5. Defining a financial conglomerate. - 2. Defining financial conglomerates; Discussion. - 2. 1. Discussion by dr. A. J. Vermaat. - 2. 2. Discussion by Drs. J. H. Holsboer. - 2. 3. Discussion by dr. K. W. Knauth. - 2. 4. Discussion by P. Pearson. - 2. 5. The case Norway by S. Simonsen. - Appendix 2. A. - A. 1. Financial institutions. - A. 2. Financial groups. - 3. Application of the most relevant definitions to the relational database. - 3. 1. The collection of the data. - 3. 2. The results. - 4. Financial conglomerates; Risks? . - 4. 1. What are the potential risks in relation to financial conglomerates ? . - 4. 2. The supervision of financial conglomerates. - 5. Solvency regulations for financial conglomerates. - 5. 1. Calculation of the required level of solvency for credit institutions and for insurance companies. - 5. 2. Calculation of the solvency fund for credit institutions and insurance companies. - 5. 3. Other elements that must guarantee the stability and confidence in the financial and insurance sector. - 5. 4. Philosophy behind the solvency requirements for credit institutions and insurance companies. - Appendix 5. A. Credit institutions. - A. 1. What is the minimum level of solvency? . - A. 2. Components of solvency. - A. 3. Risk weighting factors. - Appendix 5. B. Insurance companies. - B. 1. What is the minimum level of solvency. - B. 2. Components of solvency. - B. 3. List of symbols. - Appendix 5. C. Comparison of own funds. - 6. Research into the possibility of a global approach for the calculation of the solvency requirements of financial conglomerates. - 6. 1. Some theoretical remarks. - 6. 2. Simulations of the combined solvency. - 6. 3. Analysis of the need for an actualisation of the minimum solvency requirements. - Appendix 6. A. Theoretical problems in the application of the banking rules to insurance companies. - A. 1. Definition of the solvency needed: the weighting factors. - Appendix 6. B. Simulation exercises. - B. 1. Calculation of the solvency required according to the banking directives. - B. 2. Combining solvency requirements according to insurance and banking rules. - Appendix 6. C. Correction: minimum solvency levels. - C. 1. Correction on the European level. - C. 2. Corrections for the Dutch market. - 7. Financial conglomerates, solvency and risks. - 7. 1. Discussion by S. Simonsen. - 7. 2. Discussion by Ø. LØining. - 7. 3. Risk-based capital in the United States, discussion by J. Roos. - 7. 4. Discussion by drs. J. H. Holsboer. - 7. 5. Discussion by dr. K. W. Knauth. - 7. 6. Discussion by R Pearson. - Appendix 7. A. Thresholds and minimum guarantee funds. - 8. Why financial conglomerates? Strategic Issues. - 8. 1. What is the reasoning behind the formation of a financial conglomerate ? . - 8. 2. Financial conglomerates: new wave strategic thinking? . - 8. 3. Strategy at the limits of the possible: the management recipe of the nineties. - 8. 4. Strategy at the limits of the possible goes further than internal creativity. - 8. 5. The formation of financial conglomerates can be a strategy at the limits of the possible. - 8. 6. Conclusions. - 9. Summary and Conclusions. - 9. 1. Part 1 Definitions. - 9. 2. Part II Regulating financial conglomerates. - 9. 3. Part III Strategic issues.
