Bad Banks: Finding the right exit from the financial crisis

Overview:

Introduction

The idea of "bad banks" has emerged as a key topic in the present discussion about possible remedies for the financial crisis. This article discusses the many design components and objectives that banks and governments are working with in order to set up bad-bank structures in order to better forecast the efficacy of the various types of bad banks.

Course Objectives

At the end of this course the participants will be able to:

• Identify the asset's range
• Create the legal framework, including choosing between an on- or off-balance-sheet configuration and, if necessary, a structured solution or the creation of a distinct banking business.
• Assess the business proposal
• Specify the portfolio's business strategy, including whether to use a passive rundown, transactions, or balance sheet work-offs.
• Specify the procedures and the operational model.

Targeted Audience

• Employees in the Banking Industry
• Anyone interested in the banking and economics field

Course Outline

Unit 1: Introduction

• Five core design topics when setting up bad banks
• How governments must react

Unit 2: Status of the financial crisis and the need for Bad Banks

• Short term funding markets
• Government support of the banking system
• Recapitalization and funding support overview

Unit 3: Individual bad banks – what banks have been doing

• Legal Framework and transferability
• Business Case
• Portfolio Business Strategies
• Operating model and processes

Unit 4: State-supported bad banks plans

• When the government should create a bad bank plan
• The concrete scheme that should be applied
• How the costs to the public can be minimized

Unit 5: Outlook

• Revision
• Workshop