Most bank failures don't make prime-time news, although when they do, it's usually bad news for everyone else. Some of the biggest financial collapses in history have been caused by the collapse of large banks and other financial institutions, caused by factors such as risky lending practices, bad assets, and a lack of government regulation.
10. International Bank of Credit and Commerce
Bank of Credit and Commerce International, or BCCI, was a Luxembourg institution founded in 1972 by a Pakistani financier named Agha Hasan Abedi. BCCI gained a reputation for its innovative and flexible financial solutions, particularly in developing countries, as it quickly became the seventh-largest private bank in the world. By the 1980s, BCCI operated in 78 countries with assets totaling more than $20 billion.
However, by the late 1980s, reports of financial irregularities at the bank began to make headlines around the world, as regulatory investigations in several countries uncovered evidence of money laundering, bribery, and fraud. In 1991, regulators in the UK and US closed BCCI and froze all of its assets. The investigations revealed that the bank had been directly and indirectly involved in a range of criminal activities, including supporting terrorist organizations, dictators, and drug traffickers. The collapse of BCCI resulted in billions of dollars in losses for investors and creditors worldwide, as well as a general loss of confidence in the global banking system.
9. Bank of New England
The Bank of New England was a large regional bank based in Boston and one of the oldest financial institutions in the United States. Before its collapse in 1991, the bank was profitable and successful in the region, and at the time of its bankruptcy, it had assets of over $22 billion. As it later turned out, the bank's success was largely based on risky loans and questionable lending practices, which ultimately led to its collapse.
In the late 1980s, the New England real estate market had already begun to decline as many of the bank's loans to local developers and real estate investors defaulted. As losses mounted, the bank and its subsidiaries were unable to raise enough capital to cover their obligations and were eventually forced to declare bankruptcy in 1991.
The collapse of the Bank of New England was one of the largest bank failures in U.S. history because it affected small businesses and employment opportunities in the northeastern United States.
8. Colonial Bank
Colonial Bank was a regional bank headquartered in Montgomery, Alabama, with branches throughout the southeastern United States. It was founded in 1981 and grew rapidly through a series of acquisitions and mergers. By 2009, the bank had more than 340 branches and $25 billion in assets.
Like many other financial institutions at the time, Colonial Bank was heavily exposed to the stress of the subprime mortgage market, and had a number of loans on its books to borrowers with poor credit histories. Many of these loans were bundled into complex securities that were sold to investors around the world, which ultimately led to the financial crash of 2008. When the housing market began to collapse, most of these loans defaulted, causing Colonial Bank to suffer large losses.
In August 2009, Colonial Bank was seized by regulators and its assets, worth about $22 billion, were sold to BB&T Corp.
7. MCorp
MCorp was a Texas-based bank holding company. Intended as a strong regional bank to compete with larger national institutions, it quickly grew into one of the largest banks in Texas, with more than $18 billion in assets at the time of its bankruptcy.
The main reason for MCorp's collapse was its over-reliance on the oil and gas industry, as the company had invested heavily in the energy sector in the 1980s. When the oil market collapsed in the mid-1980s, MCorp suffered large losses on its balance sheet, coupled with excessive debt to finance its previous expansion. The bank increasingly found itself unable to service its debt obligations, and was eventually closed in March 1989. MCorp's collapse had many consequences for the Texas economy, along with a heavy bill for the FDIC to pay out insurance payments to its insurers and depositors.
6. Bank Herstatt
Herstatt Bank was founded in 1956 as a small private bank in Cologne, Germany. It initially focused on foreign exchange trading and quickly became known worldwide for its expertise in this area. However, in the 1970s, the bank began to diversify its activities, including lending to other banks and trading in speculative investments.
The collapse of Herstatt Bank occurred in June 1974 when it was unable to meet its obligations due to significant currency risk. It was eventually declared insolvent, and German banking authorities stepped in to liquidate all of the institution's assets.
The collapse of Herstatt Bank had some repercussions for the financial world, as many of its counterparties suffered significant losses. There was also a widespread loss of confidence in the stability of the system, which led directly to the formation of the Basel Committee on Banking Supervision.
5. Hokkaido Takushoku
Hokkaido Takushoku Bank is a Japanese bank founded in 1900 to develop the Hokkaido region. It would play a major role in the island's economic development, funding many of its early infrastructure and agricultural projects.
However, in the late 1980s, HTB began to expand aggressively as it invested heavily in Japan’s real estate and speculative finance sectors. At the time, the country was in an economic bubble, with most banks looking to finance large-scale construction projects. However, by the early 1990s, the bubble had burst, plunging Japan’s markets into a financial crisis. The value of HTB’s assets plummeted overnight, coupled with allegations of fraud, mismanagement, and embezzlement by senior bank officials.
The Japanese government intervened in November 1997, when it placed HTB under direct state control and bailed out its depositors. The bank's total assets at the time of its collapse were estimated at about $80 billion, plus about $7.5 billion in bad loans.
4. Continental Illinois
Continental Illinois National Bank and Trust Company was founded in 1910 in Chicago, Illinois, as a small bank serving the local community. By the 1980s, it had grown through mergers and acquisitions to become the seventh-largest commercial bank in the United States, just before its collapse in 1984.
The bank's problems began in the late 1970s when it focused on commercial real estate lending to improve the overall profitability of its portfolio. The bank's management overinvested in risky real estate projects, leading to huge losses during the 1980s housing crash and the global oil crisis.
The collapse of Continental Illinois was one of the largest bank failures in U.S. history, as it had $40 billion in assets when it collapsed. It was also a significant blow to the U.S. banking system, as the collapse threatened to destabilize the entire financial sector. The government eventually had to step in to prevent a wider crisis, bailing out the bank with a $4.5 billion loan and taking ownership of it.
3. IndyMac
IndyMac Bank was founded in 1985 by Angelo Mozilo and David Loeb, who also founded one of America's largest mortgage lenders, Countrywide Financial Corp. The bank became known for its aggressive lending practices, such as offering low-cost mortgages to borrowers with poor credit. These high-risk loans, coupled with the larger financial crisis of 2008, led to its closure by the Office of Thrift Supervision on July 11, 2008.
IndyMac easily became the largest mortgage lender to fail during the housing crisis, triggering the collapse of many other institutions in the broader savings and loan market. After the Federal Deposit Insurance Corporation (FDIC) took control of it in July 2008, all of its assets, valued at about $32 billion at the time of the collapse, were subsequently sold to OneWest Bank.
2. Credit Anstalt
Credit-Anstalt was an Austrian bank founded by the Rothschild family in 1855, but it was nationalized after World War II. It played an important role in the development of Austria's industrial and financial sectors and by the early 21st century had become one of Europe's largest banks.
This continued until about the late 1920s, due to a combination of factors including the global economic downturn, the Austrian government's economic policies, and the bank's own risky lending practices. Credit-Anstalt invested heavily in Austrian infrastructure during the boom of the early 1920s, although it was unable to repay its debts during the Great Depression.
The bank collapsed in May 1931, leading to its depositors running the bank throughout Austria. Many historians consider this to be the start of the Great Depression, as the collapse had a domino effect on the European banking system and led to a wave of bank failures and financial crises in Austria and elsewhere in Europe.
1. Washington Mutual
By the end of 2007, Washington Mutual was one of the largest financial institutions in the United States, with over 2,200 branches nationwide and approximately $183 billion in customer deposits. Throughout the early and mid-2000s, Washington Mutual aggressively made high-risk mortgages to borrowers with poor credit, which was essentially the root cause of the entire 2008 crisis. By the end of 2008, Washington Mutual had gone bankrupt after closing what we now know as the largest bank closure in history.
The federal government seized control of the bank in September 2008, selling its assets to JP Morgan Chase for $1.9 billion. The collapse would have a huge impact on investor confidence in the larger market at the time, as the bank had $307 billion in assets at the time of the collapse. The collapse of Washington Mutual and other large institutions during the 2008 crisis led to the passage of the Dodd-Frank Act in 2010.
Оставить Комментарий