Banking System Bailout-Scandinavian Style
During the Scandinavian banking crisis in the early 1990s, Norway and Sweden chose somewhat different routes to crisis resolution, though both involved government intervention and both proved effective. The Norwegian government injected a hybrid debt-equity form of capital into the largest commercial bank, though only after first extinguishing old equity claims. The Swedish government issued a system-wide debt guarantee and allowed shareholders to maintain their equity stakes, provided they also contributed new equity capital to the banks. In the (single) case where equityholders refused to participate, the government took over the bank and divided it into a "good" and "bad" part, with the latter holding the non-performing loans. Copyright Copyright (c) 2010 Morgan Stanley.
Year of publication: |
2010
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Authors: | Eckbo, B. Espen |
Published in: |
Journal of Applied Corporate Finance. - Morgan Stanley, ISSN 1078-1196. - Vol. 22.2010, 3, p. 85-93
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Publisher: |
Morgan Stanley |
Saved in:
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