Bank Restructuring and Resolution

405 Pages·2006·43.005 MB·English

by  David S. Hoelscher (eds.)

Bank Restructuring and Resolution
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Bank Restructuring and
Resolution
Edited by
David S. Hoelscher
* © International Monetary Fund 2006
Softcover reprint of the hardcover 1st edition 2006 978-0-230-01900-3
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ISBN 978-1-349-28530-3 ISBN 978-0-230-28914-7 (eBook)
DOI 10.1057/9780230289147
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Contents
List of Tables vii
List ofF igures ix
List ofB oxes x
List ofA bbreviations xi
Acknowledgments xiii
Foreword xiv
Preface xv
Notes on Contributors xix
I. Overview of Crisis Resolution and Bank Restructuring Policies
1. The Resolution of Systemic Banking System Crises 3
David S. Hoelscher and Stefan Ingves
2. The Benefits and Costs of Intervening in Banking Crises 24
Edward J. Frydl and Marc Quintyn
II. Options for Bank Restructuring
3. Techniques of Bank Resolution 97
Steven A. Seelig
4. Issuing Government Bonds to Finance Bank Recapitalization
and Restructuring: Design Factors that Affect Banks' Financial
Performance 119
Michael Andrews
S. What Happens After Supervisory Intervention?
Considering Bank Closure Options 142
Michael Andrews and Mats Josefsson
6. Post-Resolution Treatment of Depositors at Failed Banks:
Implications for the Severity of Banking Crises, Systemic Risk,
and Too-Big-To-Fail 163
George G. Kaufman and Steven A. Seelig
7. The IMF/World Bank Global Insolvency Initiative-Its Purpose
and Principal Features 184
Ross B. Leckow
vi Bank Restructuring and Resolution
III. Options for Asset Management
8. Prudential Treatment of Restructured Loans 199
Inwon Song
9. Issues in the Establishment of Asset Management Companies 212
Dong He, Stefan Ingves, and Steven A. Seelig
IV. Country Experiences
10. From the Front Lines at Seoul Bank: Restructuring and
Reprivatization 229
Chungwon Kang
11. Banking Crises and Bank Resolution: Experiences in Some
Transition Economies 268
Charles Enoch, Anne-Marie GuIde, and Daniel Hardy
12. Interventions in Banks During Banking Crises:
The Experience of Indonesia 329
Charles Enoch
13. The Role of KAMCO in Resolving Nonperforming Loans in
the Republic of Korea 348
Dong He
14. The Public Sector Recapitalization Program in Turkey 369
Mats Josefsson
Index 385
List of Tables
1.1 Fiscal Costs of Selected Banking Crises 8
2.1 Comparisons of Initial and Final Fiscal Costs of Bank
Restructuring 38
2.2 Government Intervention Techniques and Their Fiscal
Implications 40
2.3 Economic Benefits of Intervening in a Banking Crisis 54
2.4 Economic Costs of Intervening in a Banking Crisis 58
2.5 Fiscal Costs and Benefits of Government Intervention in
the Swedish Banking Crisis 75
2.6 Parameters and Variables Used to Calculate Benefits
and Costs of Intervention in the Swedish Banking Crisis,
1991-Q3 to 1993-Q4 76
2.7 Estimates of Benefits and Costs of Intervening in the
Swedish Banking Crisis 79
3.1 Easy Bank-Prior to Examination 102
3.2 Easy Bank-Correct Balance Sheet 102
3.3 Failed Banks 107
3.4 Acquiring Banks 107
3.5 Acquiring Banks and Liquidation 108
3.6 Acquiring Bank and Failed Bank Liquidation 108
3.7 Acquiring Bank and Liquidation for Whole Bank Transaction 112
3.8 Failed Banks Liquidations 112
4.1 Banks and Government 120
5.1 U.S. Prompt Corrective Action 146
5.2 Bank Closure Options Available to Deposit Insurers 151
6.1 Funds Availability of Insured Deposits 176
6.2 Funds Availability of Uninsured Deposits 178
9.1 Considerations for Decentralized Asset Management 216
10.1 Seoul Bank: Historical Summary Table 231
10.2 Recapitalization of Korean Banks-December 2000 235
10.3 Korea: Government Financial Support 237
10.4 Seoul Bank: Early Retirement Program, September 2000 244
10.5 Seoul Bank: Disposition of Nonperforming Loans 247
10.6 Nonperforming Loans in Korean Banks 248
10.7 Retail Loan Growth in Korean Banks 250
10.8 Seoul Bank: Profit and Loss 255
10.9 Seoul Bank: Balance Sheet 256
10.10 Comparison of Seoul Bank and Korea First Bank 257
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viii Bank Restructuring and Resolution
10.11 Key Management Ratios of Seoul Bank and Korea First Bank 257
11.1 Bulgaria: Selected Economic Indicators, 1993-98 270
11.2 Bulgaria: Economic Standing of Banks at the Outset of the
Banking Crisis 271
11.3 Bulgaria: Loan Portfolio of the Banking Sector by
Ownership Group (April 1996) 271
11.4 Economic Standing of the State Banks 273
11.5 Lithuania: Selected Economic Indicators, 1993-98 283
11.6 Lithuania-Indicators of Financial Sector Soundness and
Market Development 290
11.7 Mongolia: Selected Economic Indicators, 1993-98 291
11.8 Mongolia: Structure of the Banking Sector 292
11.9 Mongolia: Estimated Bank Losses and Their Allocation 303
13.1 Nonperforming Loans at Financial Institutions 352
13.2 KAMCO Purchase of Nonperforming Loans from Financial
Institutions 353
13.3 KAMCO Nonperforming Loans Portfolio 355
13.4 Nonperforming Loan AcquiSition by Type of Loans 358
13.5 Nonperforming Loans Acquisition by Type of Seller 358
13.6 Bonds Issued by NPA Fund 359
13.7 Pricing of Nonperforming Loan Purchases 360
13.8 Resolution of Nonperforming Loans by KAMCO 362
13.9 Operating Expenses of NPA Fund 365
13.10 Balance Sheet of the NPA Fund 366
List of Figures
1.1 Options for Asset Management 16
2.1 Structure and Evolution of a Banking Crisis 44
2.2 Fire Sale of Marketable Assets by Banks 65
6.1 Additional Market Discipline and Bailout Pressure as
Functions of Depositor Payment Delay Time 173
11.1 Mongolia: Real Monetary Aggregates 295
11.2 Mongolia: Bank Liquidity 295
13.1 Nonperforming Loans of the Financial Sector 353
13.2 Purchase Price Through Time 361
13.3 Nonperforming Loan Resolution Through Time 364
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