It should manage the process at the outset to avoid that outcome. Wherever possible, private shareholders of banks should also be asked to chip in. Some surgical restructuring should be undertaken to consolidate and strengthen bank balance-sheets so that private capital will come in at better valuations. It might have to accept that it is best to let some banks shrink over time.
Divestments should also be on the table. Historically, significant restructuring of stressed assets has almost always involved significant bank restructuring. Let me now elaborate “a” plan that employs two different models for stressed assets resolution and recognizes the concomitant need for bank resolution. I will provide the plan in detail to make the point that it can be done.