Case 3 Enterprise Bank

Richard Marney () and Timothy Stubbs ()

Chapter Chapter 6 in Emerging Markets Debt Restructuring, 2024, pp 299-338 from Springer

Abstract: Abstract In this chapter, the third of four case studies is presented. This case presents a financial services group with operations in five distinct jurisdictions—a holding company based in an advanced economy, and subsidiaries in four emerging market economies, all exhibiting widely diverse stages of institutional development. In the least advanced jurisdiction, poor corporate governance in the subsidiary leads to risky lending practices. One early-stage counterparty comes to represent a significant portion of the portfolio. When this borrower experiences an accounting scandal and is forced into liquidation, the local subsidiary faces regulatory insolvency. The group shareholders must scramble, not only to recapitalize the local subsidiary and secure the agreement of lenders to the group, but also to convince the local authorities that the governance failures that contributed to the crisis have been resolved. This effort, eventually successful, takes place to the backdrop of local interests trying to secure control of the operation at privileged terms by using allies within the government.

Keywords: Holding company; Subsidiary; Sovereign rating; Accounting scandal; Three lines of defense (business; risk and audit); Corporate governance; Start-up; Cash flow breakeven; Portfolio concentration; Credit policy; Independent director; Board committee; Board composition; Bylaws; Risk coverage ratio; Internal audit; Regulatory capital; Solvency; NPLs (non-performing loans); Loan loss provisioning; Cost of risk; Rights issue Tier I and II capital; Subordinated debt; Restructuring agreement; Existing finance documents; Inter-creditor agreement; Representations and warranties; Security; Capital restoration and solvency measures; Standstill; Longstop date; Governing law and jurisdiction; Financial supervisor; Corrupt practices (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-66838-8_6

Ordering information: This item can be ordered from
http://www.springer.com/9783031668388

DOI: 10.1007/978-3-031-66838-8_6

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().