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Credit supply in the wake of distressed bank acquisitions

Author

Listed:
  • Ryan Niladri Banerjee
  • Francisco González
  • José E Gutierrez
  • José María Serena Garralda

Abstract

This paper examines the credit supply effects of sale-of-business (SoB) bank resolutions under the post-Global Financial Crisis regulatory framework, focusing on the resolution of a major Spanish bank. We provide the first micro-level evidence of how an SoB resolution reshapes credit allocation. The acquiring bank preserved lending relationships, prioritizing support for riskier inherited borrowers most exposed to competing banks' retrenchment. This stabilization was achieved despite tighter capital conditions, as the acquiring bank strategically reallocated credit within its broader portfolio, shifting away from more capital-intensive exposures. By preserving credit and real outcomes for inherited borrowers, the SoB resolution demonstrates the potential of this tool to limit disruptions to the real economy, contingent on the acquirer's strategic align ment and capital capacity. Our results highlight the interplay between franchise-preservation incentives and capital constraints in shaping credit reallocation during bank resolutions.

Suggested Citation

  • Ryan Niladri Banerjee & Francisco González & José E Gutierrez & José María Serena Garralda, 2026. "Credit supply in the wake of distressed bank acquisitions," BIS Working Papers 1360, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1360
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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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