Restructuring Tools and Their Costs

Abstract

This chapter describes the restructuring tools applied during the recent crisis to the EU banks and the costs associated with them. The most typical tool was recapitalization, combined also with deep restructuring of a bank or a merger, or a bailout, in other words. Liquidation and nationalization were used rather rarely, mostly in the case of small and medium-sized banks. A new tool, bail-in, was used in Cyprus and Slovenia. This chapter is complemented by a comprehensive Appendix, offering descriptions of case studies of bank restructuring, presented together with ‘bad’ asset management companies and resolution processes applied in several EU countries.