Credit Supply in the Wake of Distressed Bank Acquisitions

Ryan Banerjee, Francisco González, José E. Gutiérrez and José María Serena
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Ryan Banerjee: Bank for International Settlements
Francisco González: Universidad de Oviedo
José E. Gutiérrez: Banco de España
José María Serena: Banco de España

No 2618, Working Papers from Banco de España

Abstract: This paper examines the credit supply effects of sale-of-business (SoB) bank resolutions under the post-global financial crisis regulatory framework, focusing on the resolution of a major Spanish bank. We provide the first micro-level evidence of how SoB resolution reshapes credit allocation. The acquiring bank preserved lending relationships, prioritizing support for riskier inherited borrowers most exposed to retrenchment by competing banks. This stabilization occurred despite tighter capital constraints, as the acquiring bank strategically reallocated credit within its broader portfolio, shifting away from more capital-intensive exposures. By preserving credit and real outcomes for inherited borrowers, the SoB resolution illustrates the potential of this tool to limit disruptions to the real economy, contingent on the acquirer’s strategic alignment and capital capacity. Our findings highlight the interplay between franchise-preservation incentives and capital constraints in shaping credit reallocation during bank resolutions.

Keywords: bank resolution; resolution tools; sale-of-business tool; credit supply (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 G32 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2026-06
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2618e

DOI: 10.53479/43525

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