Recapitalizing Banks with Public Funds: Selected Issues

International Monetary Fund

No 1999/139, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; preference shares; bank recapitalization; public funds; bank assets; bank C; bank capital; bank profitability; bank restructuring; intervened bank; asset management companies; asset valuation; bank restructuring agencies; Tier 1 capital; Tier 2 capital; preferred shares; restructuring bank; bank Negara; problem bank; credit crunch; Deudores de la Banca; bank ownership; bank supervisor; Loans; Bonds; Bank resolution; Distressed assets; Debt restructuring; Central and Eastern Europe; Asia and Pacific (search for similar items in EconPapers)
Pages: 53
Date: 1999-10-01
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Citations: View citations in EconPapers (6)

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