However, the experience of the NDIC in the management of the Bridge Banks
it previously established, have been highly successful.
Regulators are pushing for the authority to put up special purpose vehicles called bridge banks
, which will ensure that bank services to the public will not be disrupted even if an institution has been ordered closed.
The nationalised lenders will now be run by three bridge banks
. These are Keystone Bank, Mainstreet Bank and Enterprise Bank.
The compromise version calls for obliging failed banks to choose one of two options -- let the government make a forced purchase of all of its common shares or come under government administration by becoming bridge banks
Under the bills, bridge banks
would be government-controlled banks that would replace commercial banks facing imminent collapse.
would basically provide an acquiring bank with two years to assess the quality of the loan portfolio held by the bridge bank
The establishment of bridge banks
to take over failed financial institutions is the centerpiece of the government's plans for financial revitalization released July 2, which aims to salvage the financialsystem from the bad-loan mess.
Finance Minister Kiichi Miyazawa on Friday asked the opposition camp to revise a key part of its bank-resolution scheme calling for liquidating failing banks, rather than allow such banks to be permanently transformed into bridge banks
As part of the proposed system, the government will transform insolvent banks into state-controlled bridge banks
entrusted with continuing to lend, take and refund deposits until private banks make a purchase offer for the bridge banks