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Can Contingent Convertibles Help Private Asset Managers Fund Their Acquisition of Non-Performing Loans from Portuguese Banks?

Author: Mr.Andre O Santos

Publisher: International Monetary Fund

Published: 2019-05-07

Total Pages: 30

ISBN-13: 1498314309

This paper analyzes the capital structure of private asset managers in which the acquisition of nonperforming loans (NPLs) is funded with Contingent Convertibles (CoCos) placed with investors. The paper develops a model based on NPL transfer prices and residual recovery rates to assess capital structures consisting of CoCos and equity. The CoCos would contain put and call options to write down losses and write up profits, respectively, arising from liquidation and restructuring procedures. The paper concludes that the protection mechanism provided by debt write-downs embedded in CoCos and the incentives to investors provided by debt write-ups could help bridge the gap between Portuguese banks’ NPL bid prices and private equity firms’ ask prices.

Can Contingent Convertibles Help Private Asset Managers Fund Their Acquisition of Non-Performing Loans from Portuguese Banks?

Author: Mr.Andre O Santos

Publisher: International Monetary Fund

Published: 2019-05-07

Total Pages: 30

ISBN-13: 149831208X

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International Bank Crisis Management

Author: Marco Bodellini

Publisher: Bloomsbury Publishing

Published: 2022-08-25

Total Pages: 229

ISBN-13: 1509961313

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This book analyses the legal regimes governing bank crisis management in the EU, UK, and US, discussing the different procedures and tools available as well as the regulatory architecture and the authorities involved. Building on a broad working definition of 'bank crisis management' and referring to several cases, the book explores the techniques and approaches employed by the authorities to deal with troubled banks on both sides of the Atlantic. The legal analysis distinguishes between procedures and tools aimed at liquidating the bank in crisis vis-à-vis those aimed at restructuring. In this regard, attention is paid to the rules allowing for the use of public money in handling banks in trouble as well as to the role that deposit insurance schemes can play. Considerations on the impact on banks of the current crisis provoked by the COVID-19 pandemic are advanced, primarily focusing on the expected surge of non-performing loans as well as on ways to effectively manage these assets. The book approaches these issues from a comparative law perspective, providing law and economics considerations and focusing on strengths and drawbacks of the rules currently in force. The book advances policy considerations as well as reform proposals aiming at enhancing the legal regimes in force, with particular reference to the Consultation promoted in 2021 by the European Commission on the adoption of a new bank crisis management and deposit insurance framework in the Union.

How to Assess the Benefits of Nonperforming Loan Disposal in Sub-Saharan Africa Using a Simple Analytical Framework

Author: Irina Bunda

Publisher: International Monetary Fund

Published: 2021-06-08

Total Pages: 23

ISBN-13: 1513583093

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The coronavirus (COVID-19) crisis, which has hit financial systems across Africa, is likely to deteriorate banks’ balance sheets. The largest threat to banks pertains to their loan portfolios, since many borrowers have faced a sharp collapse in their income, and therefore have difficulty repaying their obligations as they come due. This could lead to a sharp increase in nonperforming loans (NPLs) in the short to medium term.

Nonperforming Loans in Asia and Europe—Causes, Impacts, and Resolution Strategies

Author: Asian Development Bank

Publisher: Asian Development Bank

Published: 2021-12-01

Total Pages: 262

ISBN-13: 9292691163

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High and persistent levels of nonperforming loans (NPLs) have featured prominently in recent financial crises. This book traces NPL trends during and after crises, examines the economic impact of high NPLs, and compares the effectiveness of NPL resolution strategies across economies in Asia and Europe. The book distills important lessons from the experiences of economies using case studies and empirical investigation of ways to resolve NPLs. These findings can be invaluable in charting a course through the financial and economic fallout of the coronavirus disease (COVID-19) pandemic to recovery and sustained financial stability in Asia, Europe, and beyond.

Non-Performing Loans and Resolving Private Sector Insolvency

Author: Platon Monokroussos

Publisher: Springer

Published: 2017-07-26

Total Pages: 438

ISBN-13: 3319503138

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This book explores the issue of private sector over-indebtedness following the recent financial crisis. It addresses the various challenges for policymakers, investors and economic agents affected by applied remedial policies as the private non-financial sector in Europe continues to face increased challenges in servicing its debt, with the problem mainly concentrated in several countries in the EU periphery and Eastern Europe. Chapters from expert contributors address reduced investment as firms concentrate on deleveraging and repairing their balance sheets, curtailed consumer spending, depressed collateral values and weak credit creation. They examine effective policies to facilitate private sector debt restructuring which may involve significant upfront costs in terms of time to implement and committed budgetary resources, as well as necessary reforms required to improve the broader institutional framework and judicial capacity. The book also explores the issue of over indebtedness in the household sector, contributing to the literature in establishing best practice principles for household debt.

Bank Debt in Europe

Author: Mrs.Vanessa Le Lesle

Publisher: International Monetary Fund

Published: 2012-12-20

Total Pages: 40

ISBN-13: 1475522037

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The crisis in Europe has underscored the vulnerability of European bank funding models compared to international peers. This paper studies the drivers behind this fragility and examines the future of bank funding, primarily wholesale, in Europe. We argue that cyclical and structural factors have altered the structure, cost, and composition of funding for European banks. The paper discusses the consequences of shifting funding patterns and investor preferences and presents possible policy options and bank actions to enhance European bank funding models’ robustness.

Private Equity Demystified

Author: John Gilligan

Publisher: Oxford University Press

Published: 2020-11-04

Total Pages: 434

ISBN-13: 0192636804

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This book deals with risk capital provided for established firms outside the stock market, private equity, which has grown rapidly over the last three decades, yet is largely poorly understood. Although it has often been criticized in the public mind as being short termist and having adverse consequences for employment, in reality this is far from the case. Here, John Gilligan and Mike Wright dispel some of the biggest myths and misconceptions about private equity. The book provides a unique and authoritative source from a leading practitioner and academic for practitioners, policymakers, and researchers that explains in detail what private equity involves and reviews systematic evidence of what the impact of private equity has been. Written in a highly accessible style, the book takes the reader through what private equity means, the different actors involved, and issues concerning sourcing, checking out, valuing, and structuring deals. The various themes from the systematic academic evidence are highlighted in numerous summary vignettes placed alongside the text that discuss the practical aspects. The main part of the work concludes with an up-to-date discussion by the authors, informed commentators on the key issues in the lively debate about private equity. The book further contains summary tables of the academic research carried out over the past three decades across the private equity landscape including: the returns to investors, economic performance, impact on R&D and employees, and the longevity and life-cycle of private equity backed deals.

Public Asset Management Companies

Author: Caroline Cerruti

Publisher: World Bank Publications

Published: 2016-05-31

Total Pages: 157

ISBN-13: 1464808759

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This toolkit is designed for policy makers and stakeholders who are considering the establishment of a publicly funded asset management company (AMC). An AMC is a statutory body or corporation, fully or partially owned by the government, usually established in times of financial sector stress, to assume the management of distressed assets and recoup the public cost of resolving the crisis. AMCs were first used in the early 1990s in Sweden (Securum) and the United States (the RTC), and again during the Asian crisis (for instance, Danaharta in Malaysia, KAMCO in the Republic of Korea). The 2008 financial crisis marked a renewal of the use of this tool to support the resolution of financial crises (for instance, NAMA in Ireland, SAREB in Spain). The toolkit does not address broader bank resolution issues. It has a narrow focus on the specific tool of a public AMC established to support bank resolution, and with the objective of providing insight on the design and operational issues surrounding the creation of such AMCs. It seeks to inform policy makers on issues to consider if and when planning to establish a public AMC through: · An analysis of recent public AMCs established as a result of the global financial crisis · Detailed case studies in developed and emerging markets over three generations · A toolkit approach with questions and answers, including questions on design and operations that are critical for authorities confronted with the issue of whether to establish an AMC · An emphasis on “how to†? that is, a practical versus a principled approach. The toolkit is structured as followed: Part I summarizes the findings on the preconditions, the design, and the operationalization of public AMCs. Part II provides case studies on three generations of AMCs, whose lessons are embedded in Part I. The case studies cover emerging and developed markets, and have been selected based on the lessons they offer.

Managing Systemic Banking Crises

Author: Ms.Marina Moretti

Publisher: International Monetary Fund

Published: 2020-02-11

Total Pages: 88

ISBN-13: 1513512277

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This paper updates the IMF’s work on general principles, strategies, and techniques from an operational perspective in preparing for and managing systemic banking crises in light of the experiences and challenges faced during and since the global financial crisis. It summarizes IMF advice concerning these areas from staff of the IMF Monetary and Capital Markets Department (MCM), drawing on Executive Board Papers, IMF staff publications, and country documents (including program documents and technical assistance reports). Unless stated otherwise, the guidance is generally applicable across the IMF membership.