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Articles 211 - 240 of 414

Full-Text Articles in Economic History

The Hungarian Bank Recapitalization Program, Junko Oguri Nov 2021

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 …

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Hong Kong Contingent Bank Capital Facility (Cbcf), David Tam, Steven Kelly Nov 2021

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 …

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Greece (2008) – Capital Injections, Manuel León Hoyos Nov 2021

Greece (2008) – Capital Injections, Manuel León Hoyos

Journal of Financial Crises

In October 2008, in the midst of the Global Financial Crisis (2007–09), the Greek government announced a €28 billion ($36 billion) government package. Greek Law 3723/2008, “Enhancement of Liquidity in the Economy in Response to the Impact of the International Financial Crisis,” was passed and approved under European Union State Aid rules. The Greek law provided for three voluntary programs: recapitalizations (€5 billion), guarantees (€15 billion), and securities (€8 billion). This case study exclusively examines the recapitalization program. In this program, the Greek government acquired convertible preferred shares in banks in order to build and maintain banks’ Tier 1 capital …

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France Société De Prise De Participation De L’État (Sppe), Devyn Jeffereis Nov 2021

France Société De Prise De Participation De L’État (Sppe), Devyn Jeffereis

Journal of Financial Crises

As the Global Financial Crisis deepened, the bankruptcy of Lehman Brothers on September 15, 2008, and ensuing contagion began affecting the French economy and financial system. France experienced declines in major economic indicators such as GDP, household consumption, and investment. In addition, the ensuing credit crunch in financial markets resulted in the seizing up of various lending markets. Due to conservative business practices, a consolidated market structure, and a sound regulatory framework, the French banks were relatively better situated than their European counterparts to weather the crisis. However, the French authorities instituted a precautionary recapitalization scheme in order to “restore …

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Finland’S 1992 Capital Injection, Kaleb B. Nygaard Nov 2021

Finland’S 1992 Capital Injection, Kaleb B. Nygaard

Journal of Financial Crises

Following a large-scale deregulation of the financial sector during the 1980s and subsequent massive credit expansion, a banking crisis in Finland caused a sharp contraction in the economy in the early 1990s. To prevent the collapse of the banking system, the government offered FIM 8 billion in capital injections. Parliament appropriated the funds in the spring of 1992 and terms were defined in June 1992. The program was open to all banks, in proportion to their size, regardless of their solvency. In the fall of 1992, FIM 7.9 billion was deployed to 56 cooperative banks and 22 savings banks of …

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Danish Capital Injections Scheme 2009 (Dk Gfc), Priya Sankar Nov 2021

Danish Capital Injections Scheme 2009 (Dk Gfc), Priya Sankar

Journal of Financial Crises

Both the international financial system and Denmark were experiencing challenges in 2007 and 2008, and they came to a head in Denmark when Roskilde Bank experienced liquidity pressures in June 2008. As it became clear that Roskilde Bank was insolvent and no private solutions would be found, and as the global financial crisis worsened leading to the bankruptcy of Lehman Brothers, the Danish government decided to take stronger action. To ensure the short-term survival of Roskilde Bank, the national bank issued a non-limited credit facility. After it passed a deposit guarantee scheme in 2008 and established a Financial Stability Company, …

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Austria: Finanzmarktstabilitätsgesetz (Finstag), Claire Simon Nov 2021

Austria: Finanzmarktstabilitätsgesetz (Finstag), Claire Simon

Journal of Financial Crises

Following the adoption of a joint framework by euro area countries in response to the intensifying financial crisis in October 2008, Austria enacted a package of measures including the Financial Market Stability Act (Finanzmarktstabilitätsgesetz, or FinStaG). In addition to permitting nationalization under certain circumstances, FinStaG allowed the Austrian government to use six specific measures to recapitalize credit institutions operating in Austria and Austrian insurance companies. According to FinStaG, €15 billion ($22 billion) could be used for this purpose, though this amount was later increased. Eight institutions received support through FinStaG, and the government granted capital and liquidity support totaling €21 …

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Lessons Learned: Neel Kashkari, Yasemin Esmen Jun 2021

Lessons Learned: Neel Kashkari, Yasemin Esmen

Journal of Financial Crises

Neel Kashkari was the Interim Assistant Secretary of the Treasury for Financial Stability between October 2008 and May 2009. He oversaw the architecture and administration of the Troubled Asset Relief Program (TARP) during this time. This “Lessons Learned” is based on a phone interview with Mr. Kashkari.

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Lessons Learned: Phillip Swagel, Yasemin Esmen Jun 2021

Lessons Learned: Phillip Swagel, Yasemin Esmen

Journal of Financial Crises

Phillip Swagel was Assistant Secretary for Economic Policy at the U.S. Treasury between 2006 and 2009. During this time, he advised Treasury Secretary Hank Paulson as his chief economist, served as a member of the TARP Investment Committee, and played an important part in the conservatorship of Fannie Mae and Freddie Mac. This “Lessons Learned” is based on a phone interview with Mr. Swagel.

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Lessons Learned: James Wigand, Sandra Ward Jun 2021

Lessons Learned: James Wigand, Sandra Ward

Journal of Financial Crises

A finance specialist and longtime Federal Deposit Insurance Corporation (FDIC) executive, James Wigand served as Deputy Director, Franchise and Asset Marketing, at the FDIC from 1997 to 2010, a period encompassing the global financial crisis of 2007-09. Wigand oversaw the resolution of all insured-depository institutions during the crisis, arranging acquisitions of troubled banks or liquidating them. He also acted as liaison between the chairman and board of directors of the FDIC. In 2010, in the aftermath of the crisis, Wigand was named director of the newly created Office of Complex Financial Institutions at the FDIC, an office formed under the …

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Lessons Learned: Arthur Murton, Sandra Ward Jun 2021

Lessons Learned: Arthur Murton, Sandra Ward

Journal of Financial Crises

Arthur Murton joined the Federal Deposit Insurance Corp. in 1986 as a financial economist and rose through the ranks to become Director of the Division of Insurance and Research, a post he held from 1995 to 2013 and which he steered through the financial crisis of 2007-09. Murton participated in the important interagency discussions held on Columbus Day weekend in 2008 that led to the establishment of breakthrough programs that proved critical in stabilizing financial markets. This “Lessons Learned” summary is based on an interview with Mr. Murton about his crisis experience.

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Lessons Learned: Michael Krimminger, Charles Euchner, Maryann Haggerty Jun 2021

Lessons Learned: Michael Krimminger, Charles Euchner, Maryann Haggerty

Journal of Financial Crises

Michael Krimminger was Special Advisor for Policy and General Counsel at the Federal Deposit Insurance Corporation during the global financial crisis. In that role, he provided legal and policy advice on the writing and implementation of the Dodd-Frank Act, including its systemically important financial institution provisions, living wills, capital markets and capital, and structured finance requirements. He is now a partner at Cleary Gottlieb Steen & Hamilton LLP. This “Lessons Learned” is based on an interview with Mr. Krimminger.

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Lessons Learned: Diane Ellis, Sandra Ward Jun 2021

Lessons Learned: Diane Ellis, Sandra Ward

Journal of Financial Crises

Diane Ellis served as Deputy Director, Insurance and Research, at the Federal Deposit Insurance Corp. during the financial crisis of 2007-09. The FDIC played a critical role in stabilizing financial conditions and establishing confidence in the financial markets by guaranteeing newly issued debt on a temporary basis for banks and thrifts as well as financial holding companies and eligible bank affiliates. The agency also fully guaranteed certain non-interest-bearing transaction deposit accounts. Ellis played an important role in implementing the Temporary Liquidity Guarantee Program that proved so critical in stemming the crisis. This “Lessons Learned” is based on a phone interview …

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Hungary: Magyar Reorganizációs És Követeléskezelő Zrt (Mark Zrt.), Mallory Dreyer Jun 2021

Hungary: Magyar Reorganizációs És Követeléskezelő Zrt (Mark Zrt.), Mallory Dreyer

Journal of Financial Crises

Hungary saw a surge in commercial real estate (CRE) lending prior to the Global Financial Crisis. By 2014, the banking sector was saddled with a high ratio of nonperforming CRE loans and repossessed property, though Hungarian banks remained solvent with high capital adequacy ratios. The central bank of Hungary, the MNB, announced the creation of an asset management company, Magyar Reorganizációs és Követeléskezelő Zrt. (MARK), to purchase nonperforming CRE assets from Hungarian banks on a voluntary basis, to clear their balance sheets and allow for increased lending. MARK was fully-owned by the MNB, which provided MARK’s share capital and a …

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Bank Assets Management Company (Bamc), Alexander Nye Jun 2021

Bank Assets Management Company (Bamc), Alexander Nye

Journal of Financial Crises

Slovenia weathered the initial shock of the Global Financial Crisis (GFC) of 2008 well enough to return to growth in 2010. However, non-performing loans continued mounting, banks experienced significant losses, and credit growth turned negative in a credit crunch. Slovenia entered a recession in 2011, experiencing the second largest GDP decline in the euro area. It was not certain whether Slovenia had the fiscal space to resolve these problems without requesting a Troika bailout from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF). In late 2012 the government tried to prevent such a program by …

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Asset Management Corporation Of Nigeria (Amcon): Asset Management, Pascal Ungersboeck, Corey N. Runkel Jun 2021

Asset Management Corporation Of Nigeria (Amcon): Asset Management, Pascal Ungersboeck, Corey N. Runkel

Journal of Financial Crises

Nigeria experienced the Global Financial Crisis as a dramatic decline in the price of crude oil and a burst stock market bubble. These losses were compounded by a high level of margin lending, resulting in large numbers of nonperforming loans (NPLs) for Nigerian banks. The government established the Asset Management Corporation of Nigeria (AMCON) in July 2010 to purchase NPLs and inject capital in insolvent banks. In three purchases between December 2010 and December 2011, AMCON acquired loans with face value ₦4.02 trillion ($26.8 billion) for ₦1.76 trillion. As a result, NPLs in Nigerian banks fell from a peak of …

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National Asset Management Agency (Nama), Alexander Nye Jun 2021

National Asset Management Agency (Nama), Alexander Nye

Journal of Financial Crises

After the Irish property boom peaked in 2007, Ireland’s banks faced declining share prices and increasing liquidity pressures. When in the aftermath of the September 2008 collapse of Lehman Brothers, Ireland’s banks lost access to liquidity from abroad, it triggered a banking crisis in the country. In spite of various responses by the Irish government, the financial viability of Ireland’s banks (as well as the government’s fiscal position) continued to deteriorate in early 2009. The Irish government attributed the problem to impaired real estate assets sitting on bank balance sheets, which made it difficult for markets to believe that government’s …

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Colombia: Central De Inversiones Sa (Cisa), Lily S. Engbith, Manuel Leon Hoyos Jun 2021

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 …

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China: 1999 Asset Management Corporations, Lily S. Engbith Jun 2021

China: 1999 Asset Management Corporations, Lily S. Engbith

Journal of Financial Crises

Chinese financial authorities began to liberalize their economy in the 1970s, though it would take two more decades to realize a solution to the massive non-performing loan (NPL) problem faced by state-owned commercial banks (SOCBs). In order to remove and dispose of bad assets left over from the policy-lending era of the former command economy, the State Council created four public asset management corporations (AMCs) between April and October of 1999. The AMCs, under the administration of the Ministry of Finance, were responsible for the acquisition, management, and disposal of NPLs from their assigned state-owned commercial bank. In addition to …

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The Resolution And Collection Corporation Of Japan, Mallory Dreyer Jun 2021

The Resolution And Collection Corporation Of Japan, Mallory Dreyer

Journal of Financial Crises

Though the Japanese real estate and stock market bubble burst in the early 1990s, the ensuing financial crisis in Japan did not reach a systemic level until 1997, when four large financial institutions failed in a single month. Because of their heavy exposure to real estate and equity markets, Japanese banks had a nonperforming loan (NPL) problem, which was prolonged, and private sector estimates of the scale of the NPL problem differed significantly from the official estimates. In response, the Japanese government created multiple asset management companies; the Resolution and Collection Corporation (RCC) was the result of the merger of …

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Kyrgyz Republic’S Debt Resolution Agency, Debra, Sharon M. Nunn Jun 2021

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 …

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Kazakhstan’S Rehabilitation Bank, Sharon M. Nunn Jun 2021

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. …

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Swedish Amcs: Securum And Retriva, Mallory Dreyer Jun 2021

Swedish Amcs: Securum And Retriva, Mallory Dreyer

Journal of Financial Crises

With the liberalization of the Swedish banking system in the 1980s, there was a rapid credit expansion, and real estate prices soared. When the Swedish economy began to weaken, real estate prices began to decline, and finance companies faced difficulties. Swedish banks were not insulated from financial pressures, and Nordbanken, a majority state-owned bank, declared large credit losses in 1990. The Swedish government’s response was initially ad hoc and targeted to specific banks, but in 1992, the government announced an open-ended guarantee of all bank liabilities. The crisis response also included a bank restructuring program and the establishment of targeted …

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Czech And Slovak Federative Republic: Consolidation Bank (Kob), Lily S. Engbith Jun 2021

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 …

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Ghana Non-Performing Asset Recovery Trust (Npart), Riki Matsumoto Jun 2021

Ghana Non-Performing Asset Recovery Trust (Npart), Riki Matsumoto

Journal of Financial Crises

The Ghanaian financial sector was in severe distress in 1985 after a decade of high and variable rates of inflation, low economic growth, and financial policies ill-suited to the country’s goals. Ghana, with World Bank support, implemented a Financial Sector Adjustment Program (FINSAP) between 1988-1997. To comply with the FINSAP, the Government established the Non-Performing Assets Recovery Trust (NPART) as a temporary public asset management company under Provisional National Defence Council Law 242 on February 28, 1990, with an initial 6-year statutory life, for the purpose of: 1) facilitating the restructuring and recapitalization of major state-owned banks; 2) expediting the …

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Us Resolution Trust Corporation, Aidan Lawson, Lily S. Engbith Jun 2021

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), …

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Senegal Société Nationale De Recouvrement (Snr), Corey N. Runkel Jun 2021

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 …

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Uruguayan Non-Performing Portfolio Purchase Scheme, Sean Fulmer Jun 2021

Uruguayan Non-Performing Portfolio Purchase Scheme, Sean Fulmer

Journal of Financial Crises

As the Latin American sovereign debt crisis spread through the continent during the early 1980s, foreign investors began to abandon Uruguay out of fear that it would devalue its currency like Argentina did in March 1981. Five small- to medium-sized commercial banks in Uruguay faced solvency crises as a result. Although the Central Bank of Uruguay (CBU) decided that a full, direct intervention into the failed banks was not necessary due to their size, the CBU arranged for the sale of the banks to foreign financial institutions, while assuming the non-performing portfolios of the failed banks to facilitate the transaction. …

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Spain: Deposit Guarantee Fund Asset Management, Manuel León Hoyos Jun 2021

Spain: Deposit Guarantee Fund Asset Management, Manuel León Hoyos

Journal of Financial Crises

The global oil shock in 1973-74 occurred at a time when Spain was embarking on a liberalization of its financial system that resulted in many new entrants, particularly small- and medium-sized institutions. The banking crisis that followed from 1977-85 affected 52 of the country’s 110 banks, most of them of small- and medium-sized, that comprised over 20% of bank deposits. Spain established the Deposit Guarantee Fund in November 1977 to provide limited deposit insurance, and, in March 1978, established a Banking Corporation to take control of and reorganize troubled banks. However, because the Banking Corporation lacked the legal authority to …

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Vision Redux: Power And Policy In Saudi Arabia, Ross Douglas Kimm Jun 2021

Vision Redux: Power And Policy In Saudi Arabia, Ross Douglas Kimm

Theses and Dissertations

The size and scope of the Vision 2030 modernization plan and the associated Saudi Aramco initial public offering are watershed events in the history of the modern Kingdom of Saudi Arabia. However, they are not outside the history of the country’s development. This thesis, tracing the roots of this latest development plan back to the founding of the current Saudi state, found that Vision 2030 shares many characteristics with previous efforts. Further, it also found precedence for powerful princes rising to power at times of tectonic change. Finally, while historical context is key to understanding this moment in the Kingdom, …

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