Recapitalizing Banks with Public Funds Selected Issues

56 Pages Posted: 15 Feb 2006

See all articles by Charles Enoch

Charles Enoch

International Monetary Fund (IMF)

Gillian Garcia

GGH Garcia Associates

V. Sundararajan

International Monetary Fund (IMF)

Date Written: October 1999

Abstract

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.

Keywords: asset management companies asset valuation bank restructuring agencies Tier 1 capital Tier 2 capital

JEL Classification: G1 G21 G32 H81 O16

Suggested Citation

Enoch, Charles and Garcia, Gillian Glenys and Sundararajan, V., Recapitalizing Banks with Public Funds Selected Issues (October 1999). IMF Working Paper No. 99/139, Available at SSRN: https://ssrn.com/abstract=880666

Charles Enoch (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Gillian Glenys Garcia

GGH Garcia Associates ( email )

2407 Highland Green Court
Alexandria, VA 22312
United States
1-703-354-6065 (Fax)

V. Sundararajan

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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