Banks’ Rehabilitation: International Experience and the Russian Practice

#7. Foresight Boom
Banks’ Rehabilitation: International Experience and the Russian PracticeBanks’ Rehabilitation: International Experience and the Russian PracticeBanks’ Rehabilitation: International Experience and the Russian Practice

The paper analyzes the international and Russian practice of stressed banks rehabilitation, which is realized in two main forms — big banks forced resolution and voluntary recovery of insolvent, but revivable banks. On the insight ground of dynamics and structure of the Russian top-5 banks liabilities and capital the paper shows that in continued credit shrinkage conditions, the Russian banking sector restructuring is possible only through voluntary recovery arrangement. Conversely, forced, but preventive rehabilitation would perceived by markets as a signal of bank’s soon insolvent, and this can become a trigger of the lenders outflow and provokes the compression of banking sector credit portfolio.

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