IMF Staff Position Notes

The Economics of Bank Restructuring: Understanding the Options

By Augustin Landier, Kenichi Ueda

June 5, 2009

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Augustin Landier, and Kenichi Ueda. The Economics of Bank Restructuring: Understanding the Options, (USA: International Monetary Fund, 2009) accessed September 18, 2024

Summary

Based on a simple framework, this note clarifies the economics behind bank restructuring and evaluates various restructuring options for systemically important banks. The note assumes that the government aims to reduce the probability of a bank’s default and keep the burden on taxpayers at a minimum. The note also acknowledges that the design of any restructuring needs to take into consideration the payoffs and incentives for the various key stakeholders (i.e., shareholders, debt holders, and government).

Subject: Asset and liability management, Asset management, Asset valuation, Banking, Distressed assets, Financial institutions, Financial sector policy and analysis, Securities, Stocks

Keywords: Asset guarantee, Asset management, Asset quality, Asset sale, Asset valuation, Asset value, Bank assets, Debt holder, Debt-for-equity swap, Default probability, Distressed assets, Equity holder, Preferred shares, Securities, SPN, Stocks

Publication Details

  • Pages:

    39

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Staff Position Note No. 2009/012

  • Stock No:

    SPNEA2009012

  • ISBN:

    9781462337422

  • ISSN:

    2617-6742