While no systemic challenges to the financial sector arose from the resolution, it is useful to understand the underlying factors and reposition the sector to avoid the same mistakes in the years ahead. 18.
Let me be upfront and say that though the failure of the two banks was due to significant capital deficiencies, the underlying reason was poor corporate governance practices within these institutions. In this instance, we saw the dominant role of shareholders who exerted undue influence on management of the banks, leading to poor lending practices.