Recapitalizing Banks With Public Funds
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Recapitalizing Banks With Public Funds
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 1999-10-01
Recapitalizing Banks With Public Funds written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999-10-01 with Business & Economics categories.
Recapitalizing banks in a systemic crisis is a complex medium-term process that requires significant government intervention and careful management at both the strategic and individual bank levels. This paper highlights the range of operational and strategic issues to be addressed and the institutional arrangements needed to foster an effective banking system restructuring and maximize the returns on government investment. The approaches to recapitalization have varied, with countries choosing different mixes of direct capital injections and asset purchase and rehabilitation. The choice of an appropriate mix is critical, to minimize the expected present value of government outlays net of recoveries.
Issuing Government Bonds To Finance Bank Recapitalization And Restructuring
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Author : Mr.Michael Andrews
language : en
Publisher: International Monetary Fund
Release Date : 2003-11-01
Issuing Government Bonds To Finance Bank Recapitalization And Restructuring written by Mr.Michael Andrews and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-11-01 with Business & Economics categories.
Bonds issued by the government or government agencies are often used to finance bank restructuring following a systemic crisis. Many conflicting considerations affect the design of the bonds used to pay for public sector investment in bank equity or the purchase of distressed assets from banks. Some bond features can leave restructured banks facing significant risks, laying the foundation for future banking sector problems. Sovereign default makes publicly financed bank restructuring more difficult, but it is still possible to carry out if banks receive sufficient interest income to provide a margin over their cost of funds.
Recapitalizing Banking Systems
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Author : Patrick Honohan
language : en
Publisher: World Bank Publications
Release Date : 2001
Recapitalizing Banking Systems written by Patrick Honohan and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Bank failures categories.
After a banking crisis, when authorities have decided to use budgetary funds to help restructure a large failed bank or banking system, apparent conflicts between various goals (involving incentives for the new bank management, for the government's budget, and for monetary stability) can be resolved by suitably designing financial instruments and appropriately allocating responsibility between different arms of government.
Recapitalizing Banking Systems
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Author : Patrick Honohan
language : en
Publisher:
Release Date : 2013
Recapitalizing Banking Systems written by Patrick Honohan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
In the aftermath of a banking crisis, most attention is rightly focused on allocating losses, rebuilding properly managed institutions, and achieving debt recovery. But the authorities' decision to use budgetary funds to help restructure a large failed bank or banking system also has consequences for the incentive structure for the new bank management, for the government's budget, and for monetary stability. These issues tend to be lumped together, but each should be dealt with in a distinctive manner. The author points out, among other things, how apparent conflicts between the goals in each of these areas can be resolved by suitably designing financial instruments and appropriately allocating responsibility between different arms of government. First the government must have a coherent medium-term fiscal strategy that determines broadly how the costs of the crisis will be absorbed. Then the failed bank must be securely reestablished with enough capital and franchise value to move forward as a normal bank. This will typically entail new financial institutions involving the government on both the asset and the liability sides of the bank's balance sheet. The bank should not be left with mismatches of maturity, currency, repricing. Assets that are injected should be bankable and preferably negotiable. The liability structure should give bank insiders the incentive to manage the bank prudently. Financial instruments can be complex and sophisticated but only if the government has the credibility to warrant market confidence that it will deliver on the contracts rather than trying to use its lawmaking powers to renege. Innovative use of segregating sinking funds and "Brady"-type bonds can help where government credibility is weak. Restructuring the bank will alter the size, maturity, and other characteristics of the government's debt. These characteristics should be optimized separately and with the market as a whole, not just the affected banks.
Recapitalizing Banking Systems Implications For Incentives And Fiscal And Monetary Policy
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Author : Patrick Honohan
language : en
Publisher:
Release Date : 1999
Recapitalizing Banking Systems Implications For Incentives And Fiscal And Monetary Policy written by Patrick Honohan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with categories.
February 2001 After a banking crisis, when authorities have decided to use budgetary funds to help restructure a large failed bank or banking system, apparent conflicts between various goals (involving incentives for the new bank management, for the government's budget, and for monetary stability) can be resolved by suitably designing financial instruments and appropriately allocating responsibility between different arms of government. In the aftermath of a banking crisis, most attention is rightly focused on allocating losses, rebuilding properly managed institutions, and achieving debt recovery. But the authorities' decision to use budgetary funds to help restructure a large failed bank or banking system also has consequences for the incentive structure for the new bank management, for the government's budget, and for monetary stability. These issues tend to be lumped together, but each should be dealt with in a distinctive manner. Honohan points out, among other things, how apparent conflicts between the goals in each of these areas can be resolved by suitably designing financial instruments and appropriately allocating responsibility between different arms of government. First the government must have a coherent medium-term fiscal strategy that determines broadly how the costs of the crisis will be absorbed. Then the failed bank must be securely reestablished with enough capital and franchise value to move forward as a normal bank. This will typically entail new financial instruments involving the government on both the asset and the liability sides of the bank's balance sheet. The bank should not be left with mismatches of maturity, currency, or repricing. Assets that are injected should be bankable and preferably negotiable. The liability structure should give bank insiders the incentive to manage the bank prudently. Financial instruments can be complex and sophisticated but only if the government has the credibility to warrant market confidence that it will deliver on the contracts rather than trying to use its lawmaking powers to renege. Innovative use of segregating sinking funds and "Brady"--Type bonds can help where government credibility is weak. Restructuring the bank will alter the size, maturity, and other characteristics of the government's debt. These characteristics should be optimized separately and with the market as a whole, not just the affected banks. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to examine the effects of bank regulation. The author may be contacted at [email protected].
Decentralized Creditor Led Corporate Restructuring
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Author : Marinela E. Dado
language : en
Publisher: World Bank Publications
Release Date : 2002
Decentralized Creditor Led Corporate Restructuring written by Marinela E. Dado and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Banks and banking categories.
Countries that have experienced banking crises have adopted one of two distinct approaches toward the resolution of nonperforming assets--a centralized or a decentralized solution. A centralized approach entails setting up a government agency--an asset management company--with the full responsibility for acquiring, restructuring, and selling of the assets. A decentralized approach relies on banks and other creditors to manage and resolve nonperforming assets. Dado and Klingebiel study banking crises where governments adopted a decentralized, creditor-led workout strategy following systemic crises. They use a case study approach and analyze seven banking crises in which governments mainly relied on banks to resolve nonperforming assets. The study suggests that out of the seven cases, only Chile, Norway, and Poland successfully restructured their corporate sectors with companies attaining viable financial structures. The analysis underscores that as in the case of a centralized strategy the prerequisites for a successful decentralized restructuring strategy are manifold. The successful countries significantly improved the banking system's capital position, enabling banks to write down loan losses; banks as well as corporations had adequate incentives to engage in corporate restructuring; and ownership links between banks and corporations were limited or severed during crises. This paper--a product of the Financial Sector Operations and Policy Department--is part of a larger effort in the department to examine the resolution of financial crises.
Stock Market Responses To Bank Restructuring Policies During The East Asian Crisis
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Author :
language : en
Publisher: World Bank Publications
Release Date : 2001
Stock Market Responses To Bank Restructuring Policies During The East Asian Crisis written by and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Bank failures categories.
During a crisis of confidence, announcements of deposit guarantees may give market participants short-term confort. But stock market responses show that using public funds for bank bailouts is not a credible way to restore the health of the financial sector.
Condition And Recapitalization Of The Bank Insurance Fund
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Author : United States. Congress. House. Committee on Banking, Finance, and Urban Affairs
language : en
Publisher:
Release Date : 1991
Condition And Recapitalization Of The Bank Insurance Fund written by United States. Congress. House. Committee on Banking, Finance, and Urban Affairs and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991 with Deposit insurance categories.
The Long Shadow Of The Global Financial Crisis Public Interventions In The Financial Sector
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Author : Ms.Deniz O Igan
language : en
Publisher: International Monetary Fund
Release Date : 2019-07-30
The Long Shadow Of The Global Financial Crisis Public Interventions In The Financial Sector written by Ms.Deniz O Igan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-07-30 with Business & Economics categories.
We track direct public interventions and public holdings in 1,114 financial institutions over the period 2007–17 in 37 countries based on publicly available information. We use aggregate official data to validate this new dataset and estimate the fiscal impact of interventions, including the value of asset holdings remaining in state hands at end-2017. Direct public support to financial institutions amounted to $1.6 trillion ($3.5 trillion including guarantees), with larger amounts allocated to lower capitalized and less profitable banks. As of end-2017, only a few countries had fully divested the initial support they provided during the crisis. Public holdings were divested faster in better capitalized, more profitable, and more liquid banks, and in countries where the economy recovered faster. In countries where the government stake remained high relative to the initial intervention, private investment and credit growth were slower, financial access, depth, efficiency, and competition were worse, and financial stability improved less.
What Happens After Supervisory Intervention Considering Bank Closure Options
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Author : Mr.Michael Andrews
language : en
Publisher: International Monetary Fund
Release Date : 2003-01-01
What Happens After Supervisory Intervention Considering Bank Closure Options written by Mr.Michael Andrews and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-01-01 with Business & Economics categories.
Closures have been used to resolve problem banks in many countries in a wide range of economic circumstances, yet banking supervisors frequently defer intervention and closure. Avoiding the costs of disruption is the principal argument in favor of extraordinary measures, such as the use of public funds for recapitalization or forbearance, as alternatives to closing insolvent banks. Well-planned and implemented closure options can preserve essential functions performed by failing banks, mitigating disruption. Extraordinary measures to avoid closure should generally be avoided, but may be used in a systemic crisis to preserve some portion of a widely insolvent banking sector.