Open Access. Powered by Scholars. Published by Universities.®
- Discipline
-
- Economic Policy (7)
- Economics (7)
- Public Affairs, Public Policy and Public Administration (7)
- Social and Behavioral Sciences (7)
- Policy History, Theory, and Methods (5)
-
- Banking and Finance Law (4)
- Bankruptcy Law (4)
- Law (4)
- Macroeconomics (4)
- Business (3)
- Economic History (3)
- European Law (3)
- Finance and Financial Management (3)
- International Economics (3)
- International Relations (3)
- Policy Design, Analysis, and Evaluation (3)
- Political Economy (3)
- Political Science (3)
- Public Policy (3)
- Finance (1)
- Legal Studies (1)
- Public Administration (1)
- Public Economics (1)
Articles 1 - 15 of 15
Full-Text Articles in Entire DC Network
Spain: Banco Popular Restructuring, 2017, Carey K. Mott
Spain: Banco Popular Restructuring, 2017, Carey K. Mott
Journal of Financial Crises
On Friday, June 2, and Monday, June 5, 2017, Banco Popular Español, S.A., experienced a depositor run. Emergency liquidity assistance from Spain’s central bank proved insufficient to meet the bank’s liquidity needs. On June 6, Popular informed the European Central Bank that it was likely to fail, triggering the European Union’s Single Resolution Mechanism. That evening, the Single Resolution Board (SRB) initiated a sale of Popular’s business to one of Spain’s largest banks, Santander Group S.A., provided that Santander raise or inject enough capital to meet regulatory requirements and provide liquidity to manage further outflows. The sale involved the write-down …
Portugal: Banco Espírito Santo Restructuring, 2014, Salil Gupta
Portugal: Banco Espírito Santo Restructuring, 2014, Salil Gupta
Journal of Financial Crises
Banco Espírito Santo (BES) was the second-largest private bank in Portugal in 2014, with assets of EUR 80 billion (USD 81 billion). A capital increase of EUR 1.1 billion to the BES was concluded on market terms in June 2014. In July 2014, BES breached minimum capital requirements and reported a EUR 3.6 billion loss owing to improper loans made to the nonfinancial arm of the Espírito Santo (ES) group. The Bank of Portugal (BOP) adopted a resolution measure for BES on August 3, 2014, to safeguard financial stability by protecting all depositors and ensuring continuation of operating activities of …
Hungary: Magyar Külkereskedelmi Bank Restructuring, 2014, Lakshimi Swaminathan
Hungary: Magyar Külkereskedelmi Bank Restructuring, 2014, Lakshimi Swaminathan
Journal of Financial Crises
In September 2014, the Hungarian state acquired Magyar Külkereskedelmi Bank (MKB), the country’s fifth-largest foreign-owned commercial bank, from Bayerische Landesbank (BayernLB) of Germany, at a depressed price. Before the sale, BayernLB recapitalized MKB by waiving its outstanding claims on the bank. The European Union had required BayernLB to sell MKB by the end of 2016 as a condition for its approval of the official support BayernLB received during the Global Financial Crisis of 2007–09. But the Hungarian central bank, Magyar Nemzeti Bank (MNB), remained concerned about the risk of further losses in MKB’s commercial and residential real estate loan portfolio. …
Greece: Ate Bank Restructuring, 2012, Stella Schaefer-Brown
Greece: Ate Bank Restructuring, 2012, Stella Schaefer-Brown
Journal of Financial Crises
The Agricultural Bank of Greece (ATE Bank) faced serious difficulties throughout 2008, 2009, and 2010. In 2011 and 2012, ATE Bank’s capital situation deteriorated further because of its exposure to the Greek sovereign debt crisis and the 50% haircut of privately held Greek bonds. In March 2012, the Bank of Greece conducted a viability assessment of ATE Bank and submitted a report to the Greek authorities recommending the resolution of ATE Bank through the purchase and assumption of specific assets and liabilities by another bank and the resolution of remaining nonperforming assets and liabilities through a bad bank. This assessment …
Greece: Piraeus Bank Restructuring, 2015, Stella Schaefer-Brown
Greece: Piraeus Bank Restructuring, 2015, Stella Schaefer-Brown
Journal of Financial Crises
In 2015, Greece began the open-bank recapitalization of Piraeus Bank (the Bank), which continued over an extended period. Concurrently, Greek authorities and Piraeus Bank formulated a restructuring plan. The restructuring and recapitalization of Piraeus Bank used funds that the European Stability Mechanism provided as part of the country’s third economic adjustment program since its sovereign debt crisis began in 2010. In October 2015, a supervisory asset quality review and stress test identified a capital shortfall of EUR 4.66 billion at Piraeus Bank due to Greek sovereign debt and other troubled credit exposures. The following month, the Bank raised EUR 1.94 …
Denmark: Andelskassen J.A.K. Slagelse Restructuring, 2015, Lakshimi Swaminathan
Denmark: Andelskassen J.A.K. Slagelse Restructuring, 2015, Lakshimi Swaminathan
Journal of Financial Crises
Andelskassen J.A.K. Slagelse was a small Danish cooperative bank with fewer than 4,000 depositors in 2015. Late that year, owing to years of corporate misgovernance and concentrated exposures to large borrowers, Andelskassen found itself on the brink of insolvency. On October 5, 2015, the Danish Financial Supervisory Authority (DFSA) notified the country’s resolution authority, the Financial Stability Company (FSC), that Andelskassen could not meet its solvency requirement and that its resolution was in the public interest. Consequently, the FSC took over the bank, wrote down all relevant capital instruments to zero, imposed losses on uninsured depositors and other creditors, and …
Cyprus: Laiki Bank And Bank Of Cyprus Restructuring, 2013, Stella Schaefer-Brown
Cyprus: Laiki Bank And Bank Of Cyprus Restructuring, 2013, Stella Schaefer-Brown
Journal of Financial Crises
In 2011, Cyprus’s second-largest bank, Marfin Popular Bank—later renamed Cyprus Popular Bank but commonly known as Laiki Bank—lost billions of euros on Greek government securities when the European Union decided to haircut Greek government bonds. This damaged Laiki Bank’s equity and shut its access to market liquidity. In late 2011, supervisors estimated the bank’s capital shortfall at EUR 3.1 billion. As Laiki Bank faced severe liquidity problems from depositor withdrawals, the Central Bank of Cyprus (CBC) began to extend emergency liquidity assistance (ELA) to the bank in October 2011. In January 2012, the bank submitted a recovery plan to the …
Survey Of Resolution And Restructuring In Europe: Pre- And Post-Brrd, Christian M. Mcnamara, Carey K. Mott, Salil Gupta, Greg Feldberg, Andrew Metrick
Survey Of Resolution And Restructuring In Europe: Pre- And Post-Brrd, Christian M. Mcnamara, Carey K. Mott, Salil Gupta, Greg Feldberg, Andrew Metrick
Journal of Financial Crises
This paper surveys 19 case studies of bank resolutions and restructurings across 15 Key Design Decisions. It focuses on interventions that occurred in Europe both in the years leading up to the adoption of the Bank Recovery and Resolution Directive (BRRD) in 2014 (when many jurisdictions were constrained by a lack of legal authority) and in the years after the BRRD was in place. The main themes that emerge are: (a) the need for resolution and restructuring to eliminate uncertainty about an institution’s solvency by closing it, recapitalizing it, or merging it with a healthier institution; (b) the importance of …
Spain – Fondo De Reestructuración Ordenada Bancaria (Frob) Capital Injections, Priya Sankar
Spain – Fondo De Reestructuración Ordenada Bancaria (Frob) Capital Injections, Priya Sankar
Journal of Financial Crises
The Spanish government created the Fondo de Reestructuración Ordenada Bancaria (FROB), known in English as the Fund for Orderly Bank Restructuring (FROB) in 2009 to perform temporary capital injections that facilitated the restructuring and mergers and acquisitions of struggling institutions. The FROB used preferred shares, ordinary shares, and contingent convertible bonds to recapitalize struggling Spanish credit institutions. The FROB injected a total of €54.4 billion of capital in three rounds. FROB I in 2010 injected capital to support the mergers of 25 insolvent regional savings banks, or cajas, into seven larger, more solvent banks through the subscription of convertible preferred …
United Kingdom Asset Resolution Limited (Ukar), Aidan Lawson
United Kingdom Asset Resolution Limited (Ukar), Aidan Lawson
Journal of Financial Crises
As the Global Financial Crisis began to unfold, the United Kingdom (UK) saw two of its largest mortgage lenders in Bradford & Bingley (B&B) and Northern Rock begin to weaken dramatically under the pressure that housing and financial markets were facing. Northern Rock and B&B both faced severe funding problems due to a worsening global credit crunch and both would be nationalized in 2008. Despite this effort, the crisis continued to worsen globally, and the UK government created UK Asset Resolution Limited (UKAR) on October 1, 2010. This organization’s goal was to wind down and maximize the return on the …
Us Resolution Trust Corporation, Aidan Lawson, Lily S. Engbith
Us Resolution Trust Corporation, Aidan Lawson, Lily S. Engbith
Journal of Financial Crises
The savings and loan (S&L) industry experienced a period of turbulence at the end of the 1970s as sharply increasing interest rates caused much of the value of the industry’s net worth to evaporate due to its focus on long-term, fixed-rate mortgages. As a result, a period of rapid deregulation followed, and S&Ls, also called thrifts, engaged in increasingly risky behavior despite many being clearly insolvent. This trend of yield-seeking growth on the part of zombie thrifts forced the government’s hand as huge losses rendered the insurance fund backing the industry, called the Federal Savings and Loan Insurance Corporation (FSLIC), …
European Banking Union D: Cross-Border Resolution—Dexia Group, Rosalind Z. Wiggins, Natalia Tente, Andrew Metrick
European Banking Union D: Cross-Border Resolution—Dexia Group, Rosalind Z. Wiggins, Natalia Tente, Andrew Metrick
Journal of Financial Crises
In September 2008, Dexia Group, SA, the world’s largest provider of public finance, experienced a sudden liquidity crisis. In response, the governments of Belgium, France, and Luxembourg provided the company a capital infusion and credit support. In February 2010, the company adopted a European Union (EU)-approved restructuring plan that required it to scale back its businesses and cease proprietary trading. In June 2011, Dexia withdrew from the government-sponsored credit support program before its expiration date, and in July, the company announced that it had passed an EU stress test. However, just three months later, Dexia wrote down its substantial position …
European Banking Union C: Cross-Border Resolution–Fortis Group, Rosalind Z. Wiggins, Natalia Tente, Andrew Metrick
European Banking Union C: Cross-Border Resolution–Fortis Group, Rosalind Z. Wiggins, Natalia Tente, Andrew Metrick
Journal of Financial Crises
In August 2007, Fortis Group, Belgium’s largest bank, acquired the Dutch operations of ABN AMRO, becoming the fifth largest bank in Europe. Despite its size and its significant operations in the Benelux countries, Fortis struggled to integrate ABN AMRO. Fortis’s situation worsened with the crash of the US subprime market, which impacted its subprime mortgage portfolio. By July 2008, Fortis’s CEO had stepped down, its stock had lost 70% of its value, and it was on the verge of collapse due to a severe liquidity crisis. The governments of Belgium, Luxembourg, and the Netherlands quickly came together and agreed to …
European Banking Union B: The Single Resolution Mechanism, Rosalind Z. Wiggins, Michael Wedow, Andrew Metrick
European Banking Union B: The Single Resolution Mechanism, Rosalind Z. Wiggins, Michael Wedow, Andrew Metrick
Journal of Financial Crises
The options available to European governments to respond to a multinational bank in financial trouble have been severely limited since each country has its own unique laws and authority applicable to banks operating within its borders. The Bank Recovery & Resolution Directive (BRRD), which was adopted in 2013 and scheduled to go into effect January 2015, harmonizes rules across EU countries for how to restructure and resolve failing banks. However, the directive would maintain the existing system of individual national resolution authorities and resolution funds. To better secure the Eurozone banks and to compliment the Single Supervisory Mechanism, which was …
The Lehman Brothers Bankruptcy G: The Special Case Of Derivatives, Rosalind Z. Wiggins, Andrew Metrick
The Lehman Brothers Bankruptcy G: The Special Case Of Derivatives, Rosalind Z. Wiggins, Andrew Metrick
Journal of Financial Crises
When it filed for bankruptcy protection in September 2008, Lehman Brothers was an active participant in the derivatives market and was party to 906,000 derivative transactions of all types under 6,120 ISDA Master Agreements with an estimated notional value of $35 trillion. The majority of Lehman’s derivatives were bilateral agreements not traded on an exchange but in the over-the-counter (OTC) market. Because derivatives enjoyed an exemption from the automatic stay provisions of the U.S. Bankruptcy Code, parties to Lehman’s derivatives could seek resolution and self-protection without the guidance and restraint of the bankruptcy court. The rush of counterparties to novate …