This was sometimes a rather time-consuming process but in the end the results were probably better than if there had been a quick “fire-sale” of the assets. It is my opinion that the use of AMCs is superior to having the bad assets remain in the problem banks. The bank staffs are no experts in the field of handling bad assets and may not obtain the best sales values. Also, the bank management needs to tackle other problems and to work hard on future strategic planning for the bank – they do not have time enough for the often very large number of complex decisions to be taken on the bad assets. 5. Conclusions Finally, can we draw any conclusions for Asia in general and Korea in particular from the way the financial crisis was handled in Sweden? BIS Review 65/1998  -6-  First, I think it is important, as I said before, to recognise the importance of macroeconomic developments. Once the fixed exchange rate had been abandoned, Sweden’s economy experienced an export-driven upturn. But it did take a long time for confidence in the Swedish economy in general to return - at least another two years. It is noteworthy that this was so despite the fact that the recovery in growth had started in the summer of 1993.
The Bank Support Authority hired experts on valuation of various types of assets to ensure that the banks did not over- or underestimate the value of their assets with the aim to motivate requirements for more support. In addition, the rules on when to identify a loan as a non-performing loan and how much to write-off were made stricter and with less room for the banks’ own judgement. 5. The Swedish government did not take any specific measures to rescue or reconstruct the non-financial companies, neither did it instruct the banks on how to use the support they had received. All support was provided via the banks and the state-owned asset management corporations, leaving them to negotiate the best terms for themselves and their non-financial customers. There was a wave of bankruptcies and restructuring of non-financial companies, primarily in the domestic sector due to weak domestic demand. 6. The extensive use of Asset Management Corporations (AMCs) in Sweden has become well known abroad. AMCs had, in fact, been established in other countries before the Swedish crisis, so this was nothing new. The special feature in our case is the emphasis on splitting an ailing bank into a good bank and a “bad part” and transferring the bad assets to the AMC at carefully assessed market values. Once in the AMC, the assets are regrouped and improved in order to become attractive to potential buyers. As soon as a reasonable price can be obtained, the asset was sold.