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Full-Text Articles in Economic Policy
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 …
Colombia: Central De Inversiones Sa (Cisa), Lily S. Engbith, Manuel Leon Hoyos
Colombia: Central De Inversiones Sa (Cisa), Lily S. Engbith, Manuel Leon Hoyos
Journal of Financial Crises
Colombia began 1999 amidst a deep recession, caused in part by financial and trade sector liberalization and exacerbated by an unexpectedly sudden appreciation of the peso. Nonperforming loans (NPLs) amounted to more than 14% of total loans, up from 8% in 1998. Colombian authorities thus decided to implement a three-year economic recovery program in late 1999. As part of the government’s strategy, banks slated for recapitalization were compelled to transfer or write off their NPL portfolios to Central de Inversiones SA (CISA), a public special purpose vehicle acquired by the deposit guarantee fund Fogafín in September 2000 for the management …
Jamaica Financial Sector Adjustment Company (Finsac)—Loan Recovery And Asset Disposal Units, Corey N. Runkel
Jamaica Financial Sector Adjustment Company (Finsac)—Loan Recovery And Asset Disposal Units, Corey N. Runkel
Journal of Financial Crises
In the late 1980s and early 1990s, the Jamaican financial sector’s share of GDP more than doubled following an aggressive market liberalization undertaken without corresponding increases in regulation or supervision. When one of the largest financial-industrial conglomerates failed in 1995, the government created an asset management company with special powers to resolve the institution. In 1997, after another significant failure, the government established the Financial Sector Adjustment Company (FINSAC). FINSAC carried a broader mandate to both recapitalize and restructure troubled financial institutions and to take over and manage their nonperforming assets (NPAs). The organization possessed no special powers to compel …
Kyrgyz Republic’S Debt Resolution Agency, Debra, Sharon M. Nunn
Kyrgyz Republic’S Debt Resolution Agency, Debra, Sharon M. Nunn
Journal of Financial Crises
In the mid-1990s, the largest state-owned banks in the Kyrgyz Republic faced insolvency and a concomitant large stock of nonperforming loans, a problem stemming from the former Soviet Union’s policy of directed credit to loss-making institutions. The government established DEBRA, a debt resolution agency and asset management company. DEBRA could liquidate or restructure a bank and take on its assets in the process, or just take on a bank’s nonperforming assets. DEBRA received the assets in exchange for government securities. Staff attempted to resolve the debt by collection, restructuring, writing off, or liquidating the assets. Officials initially established DEBRA with …
Mongolian Asset Recovery Agency, Sean Fulmer
Mongolian Asset Recovery Agency, Sean Fulmer
Journal of Financial Crises
Mongolia’s transition away from the monobank system in the 1990s did not occur smoothly, with inherited, non-performing loans from the monobank period causing significant instability and insolvency in the banking sector. These inherited portfolios, in conjunction with risky lending by the newly formed banking sector, led to the insolvency of People’s Bank (also known as Ardyn Bank), and Insurance Bank, which together held approximately 35% of total assets in the banking system. From 1996 to 1997, the Mongolian government, with the technical and financial support of the World Bank and the Asian Development Bank, formed the Mongolian Asset Recovery Agency …
Kazakhstan’S Rehabilitation Bank, Sharon M. Nunn
Kazakhstan’S Rehabilitation Bank, Sharon M. Nunn
Journal of Financial Crises
After the dissolution of the Soviet Union in 1991, Kazakhstan officials made market-oriented stabilization reforms to its previously Soviet-planned economy, including removing most price constraints, privatizing various state-owned enterprises (SOEs), and taking steps to prevent the collapse of its banking system. As part of its efforts, Kazakhstan created the Rehabilitation Bank (RB) in 1995 to absorb the large number of non-performing assets from state-owned banks while also assuming a corresponding amount of the institutions’ liabilities, essentially “shrinking their portfolios” (Implementation Completion Report 1998). The RB, established with a four-year mandate, either liquidated the debtors or required the firms to restructure. …
Czech And Slovak Federative Republic: Consolidation Bank (Kob), Lily S. Engbith
Czech And Slovak Federative Republic: Consolidation Bank (Kob), Lily S. Engbith
Journal of Financial Crises
Following the disintegration of the Soviet Union and subsequent Velvet Revolution in 1989, the former Czech and Slovak Federative Republic (CSFR) began the complex transition from a centrally controlled command economy to a market-based economy. The transition necessitated the removal of non-performing loans from state-owned banks’ balance sheets, a task assigned by the Ministry of Finance to the newly formed Consolidation Bank (Konsolidační Banka, hereafter “KOB”). Established on February 25, 1991, the KOB was specifically mandated to acquire and restructure what were known as “TOZ” loans, unsecured debt with no amortization schedules and unsustainably high interest rates. The …
Bureau De Recouvrement Des Crédits Du Burkina (Brcb), Mallory Dreyer
Bureau De Recouvrement Des Crédits Du Burkina (Brcb), Mallory Dreyer
Journal of Financial Crises
In Burkina Faso, the pre-1990s banking system was characterized by a high level of government involvement and ownership, which led to government-induced lending rather than lending based on creditworthiness. Nonperforming loans in the Burkinabe banking system grew to 10 percent of total loans in 1991. In order to address the banking crisis in 1991, the Burkinabe government entered into a Structural Adjustment Facility with the IMF and other multilateral organizations which prioritized the privatization of government-owned enterprises and included rehabilitation of the financial system. As part of this restructuring, the government established the Bureau de Recouvrement des Crédits du Burkina …
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), …
Senegal Société Nationale De Recouvrement (Snr), Corey N. Runkel
Senegal Société Nationale De Recouvrement (Snr), Corey N. Runkel
Journal of Financial Crises
In the late 1980s, Senegal embarked on a comprehensive set of reforms to its banking sector. The reforms comprised changes to management, supervision, and lending standards after loose central bank refinancing standards had let the nonperforming loans (NPLs) caused by drought and public enterprise mismanagement linger on bank balance sheets. In the process, the country attempted to recover NPLs worth hundreds of billions of francs. Senegal closed several state-controlled banks, transferring bad assets and certain liabilities to a new asset management company, the Société Nationale de Recouvrement (SNR). The SNR’s debt recoveries would reimburse depositors in the liquidated banks and …
Broad-Based Asset Management Programs, Christian M. Mcnamara, Greg Feldberg, Mallory Dreyer, Andrew Metrick
Broad-Based Asset Management Programs, Christian M. Mcnamara, Greg Feldberg, Mallory Dreyer, Andrew Metrick
Journal of Financial Crises
Dealing with high levels of nonperforming assets (NPAs) on bank balance sheets is one of the most challenging aspects of financial crisis management. High levels of NPAs can interfere with both bank profitability and general economic growth by increasing uncertainty about bank solvency and therefore funding costs, tying up resources and attention, and inhibiting new lending. One potential solution to the NPA problem is a centralized, government-driven effort to remove these assets from troubled institutions and then manage and sell them. Though such broad-based asset management (BBAM) programs existed even earlier in history, they appear to have become more common …