10.40am BST Over in Athens, the governor of the central bank is defending his decision to hand over the healthy assets of agricultural lender ATEbank to Paraeus Bank.
When a bank fails, the insurance fund covers customers' deposits, and the F.D.I.C. takes the firm into receivership, divesting it of its bad assets and returning its healthy assets to the private sector as quickly as possible.
It would have done better to reach for that kitchen sink and do both buy the worst assets at their market value and put them in a bad bank, as well as insure the healthy assets that remain against catastrophe.
In a move demanded by the I.M.F., which will cost thousands of jobs, the toxic assets of Laiki will be hived off into a so-called bad bank, while healthy assets and accounts will be moved to the Bank of Cyprus.
As the country's most troubled lender, it would be reorganized by placing underperforming loans and questionable assets into a so-called bad bank and transferring healthy assets to the Bank of Cyprus, the nation's largest financial institution.
The government was also making tentative plans to merge at least two of them — Cyprus Popular Bank and Bank of Cyprus — and place the healthy assets into a one entity, while moving troubled assets into a so-called bad bank.
Says Sam Rausa, director at FORE Partners Capital, a conduit specialist, "It's unfortunate that because of Enron, a very healthy asset-backed commercial paper market has been put through all of this nonsense".
Laiki Bank is being wound up and its healthy assets transferred to the Bank of Cyprus.
Healthy assets were prized over healthy borrowers.
· shed their healthy assets, devolving these into separated "good" banks, investment companies and insurance companies which can attract investor funds; · demonstrate that the devolved entities have a manageable coherence of function; and.
