6  BIS Review 35/2002  Treatment of insolvent/undercapitalized financial institutions As a result of such disposal of NPLs and their removal from balance sheets, insolvent financial institutions have no choice but to exit from the market. In such cases, non-viable financial institutions should be disposed of in an orderly manner.
Even in cases where financial institutions have excess assets, it becomes necessary to expand the business base and improve profitability through measures such as merger if they are not likely to survive on their own from a medium- to long-term perspective. As previously mentioned, although the number of financial institutions has already decreased substantially, further integration should not be ruled out if necessary.