Recapitalizing Banks with Public Funds: Selected Issues

Publication Date:

October 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1999/139

Subject:

Asset and liability management Bank resolution Banking Bonds Debt restructuring Distressed assets Financial crises Financial institutions Financial sector policy and analysis Loans

English

Publication Date:

October 1, 1999

ISBN/ISSN:

9781451856026/1018-5941

Stock No:

WPIEA1391999

Pages:

53

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