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Full-Text Articles in Economic History
Sweden 1991 Bank Support Authority (Bankstödsnämnden), Natalie Leonard
Sweden 1991 Bank Support Authority (Bankstödsnämnden), Natalie Leonard
Journal of Financial Crises
Sweden’s economic downturn and growing unemployment in the early 1990s led to increased uncertainty about banks’ risks. Turbulence in foreign exchange markets and speculation against the Swedish krona caused significant problems in the housing paper market. The ensuing banking crisis affected six of the seven largest Swedish banks. Loan losses peaked in 1992 at nearly SEK 80 billion while the banking sector recorded an operating loss of almost SEK 50 billion. In the fall of 1992, the government guaranteed all banks’ liabilities, took over two of the largest banks, and announced it would create the Bank Support Authority to manage …
Polish Fundusz Pomocy Instytucjom Kredytowym, Junko Oguri
Polish Fundusz Pomocy Instytucjom Kredytowym, Junko Oguri
Journal of Financial Crises
Between September and December 1925, the Second Polish Republic faced a so-called twin-crisis: the złoty, the Polish currency, collapsed, and the financial system faced bank runs and flights of deposits. On November 28, 1925, the Polish Government established Polish Fundusz Pomocy Instytucjom Kredytowym (FPIK), injecting over PLN 60 million capital through Bank Gospodarstwa Krajowego (BGK), a national development bank. The government-led capital injection scheme kept supporting the unstable Polish financial system during the inter-war period. Furthermore, in the 1930s, the FPIK served not only the large banks but also smaller financial institutions, and sometimes, non-financial companies. While the FPIK successfully …
Norwegian State Finance Fund (Gfc), Natalie Leonard
Norwegian State Finance Fund (Gfc), Natalie Leonard
Journal of Financial Crises
Following the Lehman Brothers bankruptcy in September 2008, Norway’s banking system experienced a significant liquidity squeeze. Norwegian banks had relied extensively on short-term funding from foreign funding markets and as the financial crisis evolved, foreign funding dried up. To alleviate pressure, Norwegian authorities responded with a number of emergency programs. In early 2009, the government created the State Finance Fund (SFF) to recapitalize banks. The SFF was capitalized with a NOK 50 billion ($7.07 billion) equity investment from the Finance Ministry. In total, 34 banks applied for capital injections totaling NOK 6.7 billion. By the end of 2009, six banks …
Israeli Bank Shares Arrangement (Hesder Hamenayot Habankayot), Natalie Leonard
Israeli Bank Shares Arrangement (Hesder Hamenayot Habankayot), Natalie Leonard
Journal of Financial Crises
From 1980 to 1983, Israeli consumer prices more than doubled every year and the shekel lost more than 50% of its value annually. This high inflation and currency devaluation posed an extraordinary challenge for Israel’s biggest banks. They needed to grow their capital bases to keep up with the rising market value of their assets, but investors needed protection against the continually declining value of the local currency. Banks’ solution was to regularly issue new, nonvoting shares in extraordinary amounts while ensuring investors a high return by regularly buying their own shares to manipulate prices. The government tacitly supported the …
Ireland 2009 Recapitalization Program For Financial Institutions, Steven Kelly
Ireland 2009 Recapitalization Program For Financial Institutions, Steven Kelly
Journal of Financial Crises
At the November 2008 height of the Global Financial Crisis, Ireland’s Department of Finance announced a willingness to inject capital into the six largest banks. This announcement followed the issuance of a blanket guarantee of those banks’ liabilities in September 2008. After broadly designing the potential investments in 2008, the Irish government came to agreements with Bank of Ireland and Allied Irish Banks in February 2009 to inject €3.5 billion ($4.5 billion) in each bank in exchange for preferred equity stakes. The government funded the investments from the funds of the National Pensions Reserve Fund, something it would secure the …
The Hungarian Bank Recapitalization Program, Junko Oguri
The Hungarian Bank Recapitalization Program, Junko Oguri
Journal of Financial Crises
Hungary implemented a number of new policies from the late 1980s to the early 1990s, shifting from a centrally planned economy to a market economy. Despite the top-down market reforms, Hungary lacked the knowledge to build a fully functional financial system. Eventually, an economic turmoil caused by the collapse of eastern markets and fragility in the financial system led to the banking crisis of 1992–1993, revealing the undercapitalization of the financial system. The government implemented the recapitalization, or “bank consolidation,” as part of a stabilization program. It injected capital into banks in three stages—in December 1993, May 1994, and December …
Hong Kong Contingent Bank Capital Facility (Cbcf), David Tam, Steven Kelly
Hong Kong Contingent Bank Capital Facility (Cbcf), David Tam, Steven Kelly
Journal of Financial Crises
On October 14, 2008, Hong Kong’s financial secretary announced the Hong Kong Monetary Authority (HKMA) would use Hong Kong’s Exchange Fund to provide standby capital to banks if needed. The Contingent Bank Capital Facility (CBCF) was available until the end of 2010 to shore up depositor and investor confidence in the local banking sector and commenced in parallel with a broader set of announced measures including a consumer bank deposit guarantee. Twenty-three locally incorporated “Authorized Institutions” were eligible to access CBCF capital upon request. The provisioning of CBCF capital would be accompanied by enhanced oversight from the HKMA. The Hong …