State-Owned Banks in the Transition Origins, Evolution, and Policy Responses

by Sherif, Khaled; Borish, Michael; Gross, Alexandra

• ISBN13: 9780821354995
• ISBN10: 082135499X
• Format: Paperback
• Copyright: 2003-04-01
• Publisher: World Bank Publications

Summary

This book reviews state banking systems over the last decade in the transition economies of Europe and central Asia. It includes seven case studies of individual state banks, that have been reformed or privatised over the last decade, and compares the varied approaches used. It highlights the significant costs and market distortions associated with continued state ownership, and illustrates how these challenges have been addressed in difficult economic and political contexts. The findings indicate that restructuring of state banks has proved a time consuming and costly policy, and that governments are better off moving swiftly to privatise or liquidate their remaining state banks rather than attempting to reform them.

Table of Contents

Acknowledgments	vii
Executive Summary	1	(6)
The Early Stages of Transition	7	(6)
Economic Structure of Transition Economies in the Early 1990s	7	(1)
Monetary and Fiscal Trends in 1989--95	8	(3)
Notes	11	(2)
State Banks Early in the Transition	13	(16)
Early Structural Changes in the Banking Sector	14	(3)
Traditional Roles of State Banks	17	(4)
Governance, Management, and Operating Standards of State Banks	21	(1)
Roles of Specialized State Banks	22	(5)
Notes	27	(2)
State Banks in the Mid-1990s	29	(16)
Diverging Patterns of Development	29	(2)
Broad Trends in Financial Intermediation	31	(5)
Emerging Role of Private Banks	36	(3)
Diverging Approaches to Reform	39	(2)
Notes	41	(4)
State Banks Since 1995: Continuing Problems	45	(22)
Progress in Privatization	45	(2)
Financial Condition of State Banks	47	(17)
Notes	64	(3)
The Costs of Delay and Approaches to Reform	67	(10)
The Costs of Maintaining the State Bank System	67	(1)
The Costs of Delayed Reform in the Banking System	68	(2)
Approaches to Resolving Problem Assets and Restructuring Banks---and the Costs	70	(1)
The Special Costs of Weak Laws and Regulatory Forbearance	71	(1)
Progress and Challenges	72	(3)
Notes	75	(2)
Findings and Recommendations	77	(10)
Main Findings	77	(1)
Prospects for Privatizing State Banks	78	(1)
Preconditions for Privatizing State Banks	79	(1)
Recommended Approaches to Reforming, Privatizing, and Liquidating State Banks	80	(4)
Notes	84	(3)
Case Studies	87	(32)
Romania: Closing Bancorex	87	(2)
Ukraine: Liquidating Bank Ukraina	89	(4)
Ukraine: Toward Restructuring Oschadny Bank	93	(2)
Czech Republic: Privatizing Ceska Sporitelna	95	(2)
Russian Federation: Holding onto Sberbank	97	(2)
Latvia: Restructuring and Privatizing Unibanka	99	(4)
Azerbaijan: Committing to Privatization of the International Bank of Azerbaijan	103	(3)
Annexes
Annex 1 Financial Profile of Selected State Banks	106	(2)
Annex 2 Financial Profile of Selected State Banks	108	(2)
Annex 3 Financial Profile of Selected State Banks	110	(2)
Annex 4 Market Ratios of Selected State Banks in Transition Economies, 1999--2000	112	(2)
Annex 5 State Banks Included in the Analysis for End-2000	114	(1)
Annex 6 Different Types of Arrears as a Share of GDP in Selected Transition Economies, 1992--2001	115	(2)
Annex 7 The Study's Methodology	117	(2)
Bibliography	119