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Download Or Print the Customized Documents Closing a Failed Bank Resolution Practices and Procedures David C. Parker International Monetary Fund ©International Monetary Fund. Not for Redistribution ©2011 International Monetary Fund Cataloging-in-Publication Data Parker, David C. (David Cameron), 1955- Closing a failed bank : resolution practices and procedures / by David C. Parker. – Washington, D.C. : International Monetary Fund, 2010. p. ; cm. Includes bibliographical references. ISBN: 978-1-61635-027-7 1. Bank failures. 2. Banks and banking – State supervision. 3. Liquidation. I. International Monetary Fund. II. Title. HG1573.P37 2010 The opinions expressed in this manual are those of the author and should not be reported as or attributed to the International Monetary Fund, its Executive Directors, or national authorities. The IMF does not guarantee any outcome arising from following the procedures in this manual. Please send orders to: International Monetary Fund, Publication Services P.O. Box 92780 Washington, D.C. 20090, USA Tel.: (202) 623-7430 • Fax: (202) 623-7201 E-mail: [email protected] Internet: www.imfbookstore.org ©International Monetary Fund. Not for Redistribution Contents Acknowledgments .................................................................................................................................................................. vii Preface .......................................................................................................................................................................................... ix CHAPTER 1 INTRODUCTION ................................................................................................................................. 1 Legal Framework ........................................................................................................................................ 2 Deposit Insurance during Bank Failures ............................................................................................ 3 Media and Public Relations .................................................................................................................... 4 Chapter Summaries ................................................................................................................................... 4 CHAPTER 2 PROBLEM BANK RESOLUTION AND SUPERVISION.............................................................. 7 Problem Bank Supervision ...................................................................................................................... 7 Problem Bank Resolution ...................................................................................................................... 12 CHAPTER 3 BANK INTERVENTION PROCEDURES ........................................................................................15 Duties and Responsibilities of Intervention Team ........................................................................ 16 Advance Preparation for Intervention .............................................................................................. 17 Immediate Actions at Intervention .................................................................................................... 22 Annex 3.1. Functional Area Checklists* ............................................................................................ 32 Annex 3.2. Sample Problem Bank Resolution Action Plan* ...................................................... 66 Annex 3.3. Intervention Organizational Chart .............................................................................67a Annex 3.4. Publication Notice of Appointment of Conservator or Receiver* ..................67b Annex 3.5. Notice for Registration at the Appropriate Court* ............................................... 67c Annex 3.6. Door Notice of Appointment of Conservator or Receiver* ...............................68a Annex 3.7. Notice to General Director of Appointment of Conservator or Receiver* ...68b Annex 3.8. Notice to Correspondents of Appointment of Conservator or Receiver* ....69a Annex 3.9. Notice to Bank Employees of Appointment of Conservator or Receiver* ...69b Annex 3.10. Employee Code of Conduct and Confidentiality Agreement* ........................ 70 Annex 3.11. Notice to Shareholders, Depositors, Borrowers and Vendors of Appointment of Conservator or Receiver* ...........................................................71a Annex 3.12. Initial Information ..........................................................................................................71b International Monetary Fund iii ©International Monetary Fund. Not for Redistribution Closing a Failed Bank: Resolution Practices and Procedures Annex 3.13. Outline for Initial Intervened Bank Employees Meeting ................................... 72 Annex 3.14. Sample Press Releases ................................................................................................... 73 Annex 3.15. Questions and Answers for the Press related to [Failed Bank]* ...................... 76 Annex 3.16. Telephone Script (Liquidation)*................................................................................78b Annex 3.17. Bank Intervention Managers Book Table of Contents* ....................................79a Annex 3.18. Inventory Book of Assets and Liabilities ................................................................ 79c Annex 3.19. Estimated Loss in Assets Form* .................................................................................. 81 Annex 3.20. Cash Count Sheets*......................................................................................................... 82 Annex 3.21. Asset Review Sheet* ....................................................................................................... 88 Annex 3.22. Bank Account Reconciliation Guidelines................................................................. 89 Annex 3.23. Subsidiary Due Diligence Review Checklist* ......................................................... 91 Annex 3.24. Business and Disposition Plan ..................................................................................104 CHAPTER 4 CONSERVATORSHIP OPERATIONS .......................................................................................... 107 Operations and Policies .......................................................................................................................108 Immediate Concerns .............................................................................................................................109 Ongoing Operations .............................................................................................................................109 Annex 4.1. Funds Flow Analysis ........................................................................................................116 Annex 4.2. Contingency Funding Plan Summary* .....................................................................119 CHAPTER 5 FINAL RESOLUTION ..................................................................................................................... 121 Resolution Preparation.........................................................................................................................123 Marketing Strategy ................................................................................................................................124 Legal Documents ...................................................................................................................................129 Potential Acquirers ................................................................................................................................130 Marketing Presentation .......................................................................................................................130 Due Diligence ..........................................................................................................................................131 Bid Acceptance .......................................................................................................................................132 Contract Signing .....................................................................................................................................132 Closing the Transaction ........................................................................................................................132 Public Awareness ...................................................................................................................................132 Annex 5.1. Example of a Resolution Timeline* ............................................................................134 Annex 5.2. Sample Deposit Transfer Form* .................................................................................135 Annex 5.3. Confidentiality Agreement* ........................................................................................136 Annex 5.4. Escrow Agreement* .........................................................................................................139 iv International Monetary Fund ©International Monetary Fund. Not for Redistribution Contents Annex 5.5. Exhibit “A” Bid Form* ........................................................................................................141 Annex 5.6. Sample Print Advertisement for Bank Resolution* ..............................................145 Annex 5.7. Official Receipt* ................................................................................................................146
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