1. Enhancing the Effectiveness of Deposit Insurance International Association of Deposit Insurers 5 th Asian Regional Committee Hanoi, Vietnam (March 28-29 2007) Receivership and Resolution Establishing an Effective AMC Thomas A Rose The World Bank

2. Establishing an Effective AMC Introduction The Varying Mandates for Deposit Insurers Impact of Bank Failure Resolutions Importance of Asset Resolution Conditions for an Effective AMC

3. The Varying Mandates for Deposit Insurers No One Universal Design Pay-Box Systems Premium Collection Fund Management Depositor Reimbursement Expanded Systems for Risk Management Role in Bank Failures

4. Impact of Financial Institution Failure Resolution Depositors Borrowers Creditors Community Economy

5. Importance of Asset Resolution Generally: Helps in resolving the financial institution Returns assets to the market Can contribute to economic recovery, but can also depress prices Can help to maintain credit culture Risk Minimization: Recovery for the Insurance fund

6. An Effective AMC The Success of an AMC depends upon many factors: Clear Goals Operational Issues Conducive Operational Environment

7. An Effective AMC Clear Goals What Are The Desired Results? Keep the desired goals simple Avoid conflicting goals What Will Be The Implementation Strategy? Rapid asset disposition Asset management Warehouse

8. An Effective AMC Operational Issues Asset Transfer Prices Should be market based Setting Realistic Expectations & Timeframes Followed by accountability in meeting them Political Support Find out in advance what might be of concern

9. An Effective AMC Operational Issues Adequate Operating Capital If not, little will be accomplished Allocation of expenses to assets or institutions Enabling Environment Legal, Judicial Possible Special Powers

10. An Effective AMC Operational Issues Independence Enhances credibility Accountability & Transparency Governance Internal Controls

11. An Effective AMC Organizational Issues The Board of Directors Selection, qualifications Committees and Advisory Bodies Can help to enhance governance The Importance of Skilled Staff Responsibilities and Accountability

12. An Effective AMC Information Systems Data Management Information System Reliable, accurate and comprehensive Secure and Confidential Files Debtor Information Debt Workouts

13. An Effective AMC Asset Management Guidelines for Handling Assets Consistent with set goals Decision making process and speed Flexibility in asset resolution strategy A Number of Policy Issues Associated With Asset Resolution Will Need To Be Considered

14. An Effective AMC Questions to Consider How should the portfolio be divided ? Can you prevent debtors from stripping assets? Will partial debt forgiveness be permitted? How many times do you try a debt workout with the same debtor? Will you consider asset sales? What happens to assets after a workout?

15. An Effective AMC Building Support Public and Political Support A Positive Image Is Very Important Demonstrate the benefit to society Tout Success Be honest, transparent and fair to all Be aware of sensitive issues Disclose information regularly

16. An Effective AMC Conclusion The AMC can have a positive impact Its Organizational structure is important It must have very clear goals A supportive operational environment is needed Accountability, transparency and fairness are essential elements IT IS HARD WORK !

17. THANK YOU Thomas A. Rose Adviser The World Bank (202) 458-0397 trose@worldbank.org