History has proven that asset management companies can swiftly clean up NPLs from bank balance sheets, and resolve them over a longer period of time. Acquisition of assets at their long-term economic value, instead of market value which is depressed by low liquidity and high uncertainty, minimises fire sale losses.
For example Sweden, Korea, Germany, Ireland, Spain and Slovenia used these tools to manage banking crises, often with a focus on loans backed by real estate. While overall successful, the degree of success of such entities tends to be linked to strong governance. There is one common feature of this type of AMC: state support.