Bank restructuring? Lessons for Georgia

bank restructuring ? Lessons for Georgia
restructuring

: concept, purpose and competition. Termini restructuring is of Latin origin and change, improving the means of the structure of an object or system, ie its shape and texture (morphology). This means in fact the same character mode of operation. The use of extensive economic restructuring plan in the texts mainly with debt, including foreign payments and taxes (trade) balance, the business sector of the economy and separate enterprises, the banking system completely separate banks (other banks).

define “restructuring” in the legislation as follows: the restructuring of the credit organization is a complex of measures to eliminate fluctuations in the financial organization and capacity to pay or recovery-oriented the realization of the liquidity of the organization. This definition does not need to say opinion on the cause of the discussion, first, here they are all individual banks and the banking system itself, and secondly, it is highly technical and mixtures of nature and competition, the restructuring process with the activities that are (or should) be done in this process.

So, it is not common, largely excluded from the definition of restructuring, even if a majority agrees with the idea that we must consider readjustment Restructuring (recovery) of the banking system and income the crisis phase, and its return in good working abilities. Sometimes the use of terms “to stabilize the banking system,” but we believe that to be comfortable. The fact is that the achievement of stability can be provided in various ways, including the liquidation of the entire system. There is another something they see as the restructuring process of overcoming the difficulties that have arisen during the crisis. This view is not very comfortable

thinking of the essence of the thing and not the definition , hen, we have to look into rebuilding the banking system as a process -. Totality of decisions and actions. Its basic elements are: eradication

and minimizing the negative impact of factors of poor macro-economic, political and other common situation and prospects of the banking system, improvement of systemic organization (structure, types, types) of all organizations such loans, the creation of conditions for effective competition and civil society together, improving the legal basis of cooperation and mutual benefit organization and economic mechanisms to the bank and its customers, improve the quality of the entire banking system and its administrative components, the states Financial Healing separate banks and other financial institutions, effective (with minimal social experience) Liquidation of major financial institutions.

prediction of these elements, we can the following definition of restructuring the banking system in the process management of global adjustment (improvement), the addition of industry support, treasury, taxation, budgeting and information policy in the policy of the banks themselves and leading to the formation of banking system sufficient to effectively, confidently directed and developed the modern and dynamic requirements.

According to this definition effectively, restructuring, banking system stable and healthy is not necessary (although it is possible improve or reform). This restructuring is a cure (cure something that is not healthy), that restructuring can be understood and must be understood, the process by which the banking system of land transit concrete the new state of development. It is also clear that the restructuring of these systems, which can not in crisis and recovery without assistance. Finally, (you must see private financial hardship) in terms of restructuring, we absolutely have to discuss any bank. In this case, restructuring, a process of adaptation, it seems that their own instruments, which is not only the instruments of the atomic number of the management process should be limited banking

After the above, we can do the main objective of restructuring the banking system – the operation and its movement to the relatively new path in which he lost earlier gains possible progressive development and is sufficient to meet the real sector of the economy back

With regard. With this, we need to focus on the principle are discussed, access below to the context of the process: the activities related to the restructuring n is available if it is profitable, if we want to predict not only because of the banking crisis, but also define the fundamental failures of economic relations, making the banking system to survive in the modern stage, the restructuring the banking system, which must, indeed, to give its rebirth in the first state, do not look to solve problems, not the entire system or the economy, it is necessary to determine not only tactical operations before beginning the process of restructuring, but also on strategic objects: such a structure of the banking system sufficient to achieve the objectives and functions are on the banks get to the next stage;

for activities transformation of the banking reform, they must be clearly defined by a circle of problems that must be set the price of activities during the reform process with the banking system and they are renewed,

restructuring p

a process for resolving crises can not be simple, quick or cheap

Th8is common goal, mentioned above in turn list of problems can be concreted should work in any form true concept of restructuring in modern conditions of Georgia: Eradication />

an idea on the fact that the main objective of restructuring the banking system recapitalization of banks (lost a capital increase and future growth), but this is not entirely true: Since this is the most difficult problem is that a range of profitability and confidence of the investment is very close.

Some banks offer such an understanding of the restructuring and how activities were pragmatic radical reform of the banking system, the essence that ultimately led the merger of banks on the brink of bankruptcy principles of specialization (specialized banks across the country working, banks oriented towards the Export clerks or groups of large companies, including regional banks). they thought that “make the system of” new groups obey the strict supervision of the competent institutions of the state or groups of companies, conversely, it will the right to work on the budget. The proposals by individual banks are not the problems of restoring the banking system as part

We can provide basic problems of restructuring the banking system are the following.

courses on the basis of a sound banking system market through the recruitment of separate banks issue, the provision of structural reform of the banking system;

The increase of the total capital of banks and filling banking resources in the long run

creating conditions to stimulate growth in the quality of commercial banks in the market, including those in the regions must

The main objective of the restructuring program. Creation such a layer of the banking technology market, marketing, and makes the basic policy provides benefit from credit operations. It is interesting to note that within 2-3 years of this program capital into the banking system up to 30-40% and share of loans in the loan portfolios of the banking system – 30%. Part of the benefit of credit totaling banking system should not be done less than 6%. Half of the less healthy banks should continue to operate in areas

The concept of the first steps, the foundation for achieving effective program to restructure the banking system must be formed in this way must .

The treatment of a concept to develop the banking system and its early acceptance as a guide 2-3 years, a program consisting of over conditions of employment liabilities transferred and their implementation, we -next page! on the restructuring of its purchases of the banks money .. poor implementation include recapitalizing banks, we see that the state body or others meet in the capitals of banks for a small time, increases in capital and lending capacity of banks and then sold their shares in the capital of banks and the adoption of the law on security systems for deposits of individuals in commercial banks at a time, creating an equal and development of each bank, we must reject other banks social sense, “” education. a system “and somehow” related “to someone who clearly articulate the role of government banks and state banking system, the achievement of clearly support the regional market, commercial banks, the establishment of effective mechanisms for development of infrastructure of banks and their operations, changing a tax system by commercial banks, processing and implementation activities for refinancing commercial banks by the bank, the creation of central and implementation of package legislative and organizational measures in the development of mortgage lending, fixing the process of commercial banks Transit International Accounting Standards restructuring: principles and conditions we follow the mandatory principles (rules) the process of restructuring the banking system ..

A principle of solidarity bonds is important is to consider that in the process above it (with more resources) and to coordinate the banks themselves (in the first place – the owner) .., their creditors and the government, it is impossible without the support of the state banking system restructuring, although it is clear that the state is not able to support any bank, with greatly reduced resources. Consequently, banks first try to resolve their problems themselves and managers and creditors of healing must be that banks have the advantage of position.

The principle of minimizing losses and expenses. He said that while the realization of the restructuring, we have these activities in order to overcome the odds of the crisis with the household expenses (financial expenses of the Company) and low losses of the banking side of the system and audit clients banks to be on.

banks is more problematic way in captivity, but socially difficult must first method measured approach to the problems of depositors of banks to liquidate early treatment of non-solvent banks, the crisis (eg the Indonesia in 1997 .. – 1998 wells). According to many experts, is the best way out of the confluence of the troubled bank to health, although very bad recommendation.

A minimization principle applications for liquidation priorities, business reorganization and support and does not mean bankruptcy in the process of restructuring and financial difficulties.

A principle of equitable distribution of costs of restructuring the party indicated that the cost of treatment must be compensated by these banks, the risks associated with banks that you receive are responsible for the loss and profit after restructuring (for example, participants in the banks, their higher management). service obligations is unable to pay the managers and owners of banks can be expressed, for example, by an appropriate reduction in their capital of banks participate in the restructuring as additional input in capital cities the bank. Part of the loss on costs, applicants will be covered.

A principle of the method: the strategic approach, defining the strategic problem of this type of banking system of the company after the restructuring (in the state if they wanted equality with new tasks and functions of banks in the new stage). Only after this advantage, they must choose and the agreed activities, which, for a readjustment of separate banks and their whole system can be recommended.

A principle of the complex method means the approach of a system defined by the program must be fully respected. It is impossible to set the concept of reconstruction to bring them up in separate rooms (for example, must all are limited not only with the solution of financial problems in a concrete period shown).

We are such principles for restructuring the provision of names, such as transparency (the need) the distribution of costs associated with strengthening the management of these banks. supported by the State, promotion of independent adjustment of banks with the situation has changed and others

Under the terms of restructuring is also important

successful reconstruction of the banking system close contact with both clear and I know they make known issues of longstanding business, industrial, structural and financial policies. For example, credit companies, especially large, possible only if it is effective when he refuses a clear strategy statement. It is an important condition without breaking the bank restructuring can not be consequential. For the estate of banking system restructuring to recover and develop these essential concepts, which reflect the main economic goals are. This view can not achieve the objects of the operational nature to be aligned (recovery of a payment mechanism, the solution of other problems). This is not really the restructuring of the banking system to try, outside of the reform and restructuring of the environment in which the bank functions. This application mainly to the real sector of the economy and businesses affected active. Banking System “integrated” and the success of restructuring is to know what is the basis of how to know what kind of economic support it. practical applications and opportunities in the real economy are the main criteria for the definition of the banking system needs. Solving problems in the real economy of applications benefit state policy. needs in each case, the real sector and banking system, referring to concrete, which seems to be on additional incentives for development. restructuring of the banking system must be revised by tightening relations money and credit being. This hardening of the relations of the money must play a leading role (private avoid barter and other non-cash “payments” in the economy). This must be the provision of activities to promote investment in the real sector of the economy because it is impossible to escape the economic crisis in the other crisis. restructuring the banking system is impossible without personal revolution. Specialists in short-term financial speculation must be the modern trends of control or the ability of these professionals who can work with the real sector, have knowledge and skills in the context of estimation and management of investment and industrial risks. bank restructuring system access important correction of the legislative and normative base.

According to the above, we have some questions to the leading restructuring the banking system, on which he can not disconnect any satisfactory answers.

What is the main reason for the situation, reflected in the banks? Good, we must make the choice situation in the real economy, especially banking. We do not think right, for two reasons to oppose them.? others on this as our concrete conditions What is the basic concept of the restructuring process (significant portion constituted) Managing the central banks must turn give different answers to this central question, there is no such variations correspond to each other .. financial difficulties of the problem banks, viability and prospects of continuing the development, 2 in increasing the level of capital adequacy of banks, 3 financial difficulties; 4 Recovery is not so much by the banks, but relations Cash credit .. 5: … Establishment of new banking features, which should be the structure of the banking system, education, the target? This is a fundamental problem. It is necessary to erase any name. Banks have a “scope” if it were to be no choice What a concept for the restoration and development of its private banking system following questions as impaired or (more in practice then in theory).? we must consider the traditional support of healing under its reorganization and adjustment, financial problems and structural reform and each other?Foreign experiences of restructuring the banking system. Bank of Reconstruction is not a unique problem. banking crisis was seen in almost 70 countries in 20 years. A process of restoring the balance is very difficult to continue everywhere, and the state have been involved (in spite of several scales of participation of different places and times sometimes causes of the crisis coincided with each other, sometimes They were only specific forms of their solution was, in many cases .. credit stabilization, to fulfill their capital requirements for banks, the purchase of its assets (including debt existed) and others in the rule base. Gravity financial state directly, or rejected in the type of funding agencies created specially for her.

United States has been a pioneer in the field of bank restructuring in which a system of guaranteed deposits and an institute specializing in the management of these tanks was founded under the influence of the crisis in 1929-1933. This institution was a federal deposit insurance corporations (FCID). The next step banking sector restructuring is related to the series of the banking crisis took place in completely different countries over the past 20 years.

In 1980 to 1991 in 1300 and 1400 the bank savings loan associations arrested existence in the SU According to various estimates, the banking system restructuring costs 3 to $ 500 (5% of assets) was held in 1995 banking crisis <-..! next page -> Japan in the years 1994-1995 – France, 1989-1990 – Australia, 1987-1989 – Norway in 1991 – in Sweden in 1991-1993 – in Finland, 1980-1982, 1900-1991 and 1995 – in Argentina, 1990, 1994-1995 – Brazil, 1981-1982, 1990-1991 and 1995 – in Argentina and Mexico, 1982-1984 – in Chile in the years 1994-1995 – in India in 1994 – Indonesia, 1985-1988 – Malaysia in 1981-1987 – the Philippines, 1991-1995 – Hungary, the 1990 -. Poland, Bulgaria, Lithuania, Latvia, Estonia and others could be used in some countries systemic crisis be repeated at regular intervals, some developing systemic crisis, avoiding the core .. with the insurance system, mainly at the expense of effective banking supervision and regulation of prices

of restructuring the banking system is very different: 5% of the WIP in the United States, 10 – Hungary and Brazil, more than 40 – and 55% in Chile – in banks Argentina.Central problem may help banks in crisis, particularly in the case of spoiling their response to the current liquidity in Venezuela, eight non-solvent banks to use special lines of liquidity to compensation. money. Even if they were not able borrow sources in the future.

In other cases, an important step in credit by central banks. They are supported in the banking crisis and called on the means and conditions credit agencies for restructuring. support long provided by the Central Bank of Poland is a good example when he bought stocks of small and profitable long-term loans from banks. loans to long-term central bank may depend on creating elaborate plans for improving the situation of banks (list of activities and expected results).

Reduce the level of reserves (or growing share of payments to them) is another way to support banks as part of compulsory reserve deposits were confirmed post published. to fund purchases of certificates of deposits known institutions that had worked through the program of bank restructuring

you have specific tax advantages for use as rarely in the process. Bank restructuring Despite this, Brazil fiscal stimuli to promote the confluence. “swallowed” the Bank could then exclude the value is not actively reached loans, “Willow” received credit, the difference between the purchase and utilization balance, some countries tax incentives for stocks and bonds in the implementation of the restructuring program published.

You somehow the rules of regulation and management under restructuring the banking system make it easy. you compensate for this by creating such a center called the control system and management (in the crisis period), who sees the risks of banking activities more adequately.

can order banks in a difficult position to support the actions of the state weakened the sense of responsibility of banks. In these conditions, increasing below to no great importance to the weakening of the involvement of irresponsible behavior of banks in forward pass. Assume that it is necessary to produce a sum large profits and subscribers to the Bank grant to be. their commitments, which are charged by banks to launch a capital partially provided support South Korea, the state committed with the bad loans of banks in Mexico than in the case if its participants to provide additional income during the bankruptcy of credit institutions were in Brazil and India, its participants required additional amount equal to the size of its original power rating of finance.

This subscriber banks are not always held with the responsibility, for example in case of loss of loans from banks by the information state, it is necessary that the size of the zone of responsibility, because the participants do not have the ability to solve problems in the credit organization regarding the next step in transparency and organization of computations and the reasons.

They have created specialized agencies in most countries, while restructuring the banking system, which have been committed with the problems of managing this process.

Government and central banks of many countries problems solved its own banking crisis and restructuring of the banking system in different ways. In practice, it was shown that there is no ideal form of restructuring .. neither the general strategy to normalize the situation in the banking sector very often a particular action is a departure from specific reason that allows us to separate a total sign of effective programs that have been implemented in other countries:

fastest definition of the extent of problems in their recognition of the state and the government’s willingness to provide substantial financial resources for solving problems; enough

go transparent, activities, gasoline the problem, going from “bad” assets of problem banks

complex treatment, transparency, operational program, the precision and iterative development, development

Process Banking

Chile A complex of activities in the large size of the restructuring of the banking system … Chile since 1984, when a central bank for loans to countries in the stabilization of grant to support the liquidity of banks and purchase of credit of trust or modification is not active labor began began on liquidity. delisting of its bank debt was how to turn the creditors to shareholders.

is a guarantee for foreign debts of private banks. size of the debt in transit to the Central Bank of Chile in late 1985, overcame the entire share capital of problem banks 3 times and there were 6 billion (25% of WIP ). About 60% of the loans have been atoned for last on their bonds by the central bank.

They feared precisely control the number of state banking system in the country.

recapitalize banks are used under the control of the state of transit in the process of issuing additional shares are small and medium investors made up. A State Development Corporation support (CORFO) worked in this program.

Results. Banks practically fulfilled its obligations under the deposits of natural persons and legal entities with the help of activities used. Although the amount of domestic private banks reduced from 22 to 15, but they managed to keep all major