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       T R O U B L E D   C O M P A N Y   R E P O R T E R

                          E U R O P E

          Friday, January 10, 2025, Vol. 26, No. 8

                           Headlines



A U S T R I A

SIGNA HOLDING: Top Subsidiary Files for Bankruptcy in Vienna


G E R M A N Y

DEUTSCHE LUFTHANSA: Fitch Assigns 'BB(EXP)' Rating on Sub Notes
DEUTSCHE LUFTHANSA: Moody's Rates New Sub. Hybrid Notes 'Ba1'


S W E D E N

PMD DEVICE: Files for Bankruptcy in Ireland and Sweden


U N I T E D   K I N G D O M

DANCING LEOPARD: Plunges Into Administration
EVANS TEXTILE: Appoints BDO as Administrators
GB EYE: Begbies Traynor Named as Joint Administrators
HUBOO TECHNOLOGIES: Interpath Named as Administrators
PETROFAC LTD: Restructuring Plan Hearing Scheduled for Jan. 28

STO LIMITED: Grant Thornton Appointed as Administrators
YEOH SAXTON-PIZZIE: Fell Into Administration


X X X X X X X X

[*] BOOK REVIEW: Bailout: An Insider's Account of Bank Failures

                           - - - - -


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A U S T R I A
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SIGNA HOLDING: Top Subsidiary Files for Bankruptcy in Vienna
------------------------------------------------------------
Reuters reports that Signa Prime Selection AG, a key subsidiary of
the now insolvent Austrian Signa Holding that owns prestigious real
estate in Germany, filed for bankruptcy on Thursday, Dec. 26.

The company announced that it had filed for debtor-in-possession
reorganization proceedings with the Vienna Commercial Court, and
Signa Development Selection AG would follow suit.

"The aim is the organized continuation of business operations
within the framework of self-administration and the sustainable
restructuring of the company," the company said in a press release,
notes the report.

Signa Holding, a network of some 1,000 companies, is owned by
Austrian real estate and retail mogul Rene Benko, Reuters notes.
The network has recently been beset by the higher building costs,
energy prices, and interest rates that have dogged the entire
property sector of late, while the brick-and-mortar retail sector
is also struggling, partly against online competition.

The holding firm filed for insolvency in November this year,
recounts the report.




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G E R M A N Y
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DEUTSCHE LUFTHANSA: Fitch Assigns 'BB(EXP)' Rating on Sub Notes
---------------------------------------------------------------
Fitch Ratings has assigned Deutsche Lufthansa AG's (Lufthansa;
BBB-/Stable) planned subordinated notes a 'BB(EXP)' rating.

The subordinated notes qualify for 50% equity credit and are rated
two notches below Lufthansa's Long-Term Issuer Default Rating (IDR)
and senior unsecured rating of 'BBB-' and aligned with its
outstanding subordinated instruments. Equity credit and the
assignment of the final rating remains contingent upon the receipt
of final documents conforming to information already received.

The planned notes will be used for general corporate purposes
including the refinancing of the existing EUR500 million unsecured
subordinated notes due 2075 callable from 12 February 2026. The
hybrid rating and assignment of equity credit are based on Fitch's
"Corporate Hybrids Treatment and Notching Criteria".

Key Rating Drivers

KEY RATING DRIVERS FOR THE NOTES

Equity Treatment and Notching: The issue qualifies for 50% equity
credit and is rated two notches below Lufthansa's Long-Term IDR as
it meets Fitch's criteria for subordination compared with senior
unsecured instruments. This is based on the planned notes'
remaining effective maturity of at least five years, discretion to
defer coupons, no event of default, and coupon step-ups within
Fitch's aggregate threshold of 100bp.

Cumulative Coupon Limits Equity Treatment: Interest deferrals are
cumulative for a maximum five years and must be settled in cash,
which limits the equity credit to 50%. Despite the 50% equity
credit, Fitch treats coupon payments as 100% interest. Lufthansa is
obligated to make a mandatory settlement of deferred interest under
certain circumstances, including the declaration of a cash
dividend, calls on equally ranking junior obligations, or at the
fifth anniversary of the first missed interest payment.

Same Rating as Outstanding Hybrids: The expected rating of the
planned subordinated notes is aligned with the existing hybrid
notes' rating, although the planned subordinated notes are legally
senior to the existing hybrids, a feature that Fitch expects will
be removed over time as Fitch expects the existing subordinated
notes to be refinanced shortly (next call in February 2026). Fitch
also notes that total hybrids in Lufthansa's overall debt structure
remain relatively small, at around 13% as of end-2023 proforma for
the planned notes.

KEY RATING DRIVERS FOR LUFTHANSA

Robust Business Profile: Lufthansa has a worldwide leading market
position, supported by a diverse multi-brand network and multi-hub
strategy across major European cities. Its world-leading cargo and
maintenance, repair, and overhaul (MRO) segments provide
significant synergies and help mitigate market cyclicality. In
particular, Lufthansa Technik (MRO) continues to benefit from
delayed aircraft deliveries and ongoing issue with Pratt &
Whitney's geared turbofan (P&W GTF) engines.

Profit Hit in 2024: Lufthansa Airlines' performance was
particularly hit in 2024 by the labour dispute (mostly in 1Q24),
some weakness in yields (potentially an ongoing issue) and
operational inefficiencies due to delayed aircraft deliveries. This
led the company to revise its 2024 EBIT guidance to EUR1.4
billion-EUR1.8 billion compared with EUR2.7 billion in 2023 and
initial 2024 guidance of stable EBIT against 2023.

Its 2024 EBITDAR forecast is EUR3.7 billion (EUR4.6 billion in
2023), but Fitch expects 2025 EBITDAR to partially recover, despite
its assumption of slightly weaker yields in 2025 and unchanged fuel
price expectations. The expected improvement will mostly come from
the company's cost-cutting measures along with profit growth at
Cargo and Technik. Historically weaker profitability for Lufthansa
compared with its main peers has been sufficiently offset by a more
conservative capital structure, in its view.

Temporary Leverage Spike: Lufthansa's Fitch-adjusted EBITDAR gross
and net leverage was comfortably within the sensitivity at end-2023
at 2.9x and 1.3x, respectively. However, the profit decline in 2024
will lead to EBITDAR gross leverage spiking at 3.7x, exceeding its
negative sensitivity of 3.5x, while net leverage will remain
comfortably within the sensitivity. Fitch anticipates that EBITDAR
gross leverage will return within the sensitivity in 2025, with net
leverage in the range of 1.8-2.0x during 2024-2026 (vs. 2.5x
threshold).

Prudent Financial Policy: Lufthansa is committed to maintaining its
adjusted net debt (including net pension liability) to adjusted
EBITDA (as reported by the company) ratio below 3.5x and in general
to retaining its investment-grade rating. Management has
successfully maintained this ratio well below the target, achieving
1.7x in 2023 and 1.9x by end-September 2024. The company's target
leverage broadly translates into Fitch's negative sensitivity for
EBITDAR net leverage for the 'BBB-' rating.

Wider Industry Risks Remain: Its forecasts include conservative
assumptions to account for risks related to operational constraints
(delays in aircrafts deliveries and slower capacity uptick), demand
fatigue and slightly increasing unit costs (driven largely by staff
costs following signed CLAs, emission reduction costs and general
inflation). Lufthansa is not meaningfully affected by the P&W GTF
engine issues.

Derivation Summary

Lufthansa is the largest EMEA airlines group by fleet size and
revenues and benefits from a strong position in cargo and MRO,
mainly in Europe and North America. As a multi-brand group,
Lufthansa compares well with IAG and Air France-KLM (AFKLM;
BBB-/Stable) due to its diversified hub structure and extensive
route network.

AFKLM is Lufthansa's closest peer due to their strong respective
hub positions with geographic proximity. Both companies operate
passenger, cargo and MRO businesses, but Lufthansa remains the
leader in each. However, AFKLM has reported a faster recovery from
the pandemic, better profitability and higher geographic
diversification globally. Fitch views their business profiles as
comparable.

British Airways Plc (BA; BBB-/Stable, SCP bb+) compares well with
Lufthansa in terms of its strong hub position in Europe and
diversified network. Fitch views Lufthansa's overall business
profile as stronger because of its larger size and better business
mix. Along with Lufthansa's more robust financial profile, with
lower leverage and higher liquidity, this leads to its IDR being
one notch above BA's Standalone Credit Profile (SCP).

Turk Hava Yollari Anonim Ortakligi (Turkish Airlines; BB-/Stable)
also operates passenger, cargo and MRO businesses but remains a
smaller player than the German airline. Lufthansa has a stronger
business profile thanks to its more favourable geographic position
with a better operating environment. Turkish Airlines is currently
rated at the same level as Turkiye's Country Ceiling.

Key Assumptions

See "Fitch Affirms Deutsche Lufthansa AG at 'BBB-'; Outlook Stable"
dated 30 October 2024.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

- EBITDAR margin falling consistently below 11%

- EBITDAR net leverage above 2.5x and EBITDAR leverage above 3.5x

- EBITDAR fixed charge coverage sustainably below 2.8x

- Weaker than expected business recovery or aggressive external
growth materially beyond its current expectations

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

- EBITDAR margin sustained above 15%

- EBITDAR net leverage below 1.5x and EBITDAR leverage below 2.5x,
also backed by a financial policy commensurate with these ratios.

Liquidity and Debt Structure

As of 30 September 2024, Lufthansa had EUR8 billion of
Fitch-adjusted available liquidity, which included EUR1.4 billion
of cash and equivalents and EUR6.6 billion of Fitch-adjusted
securities. This is complemented by a EUR2.5 billon undrawn
sustainability-linked revolving credit facility signed in February
2024 for a five-year tenor with two one-year extension options.
Available liquidity is sufficient to cover short-term debt
repayment and Fitch-expected moderately negative free cash flow.
Lufthansa has a prudent liquidity policy that aims to maintain
between EUR8 billion to EUR10 billion of liquidity.

Issuer Profile

Lufthansa is the largest aviation group in Europe and operates the
biggest fleet in Europe with 731 aircraft at end-September 2024.
Lufthansa's businesses include one of the largest cargo businesses
in Europe and the world's leading MRO business.

MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS

Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.

   Entity/Debt               Rating           
   -----------               ------           
Deutsche Lufthansa AG

   Subordinated          LT BB(EXP)  Expected Rating

DEUTSCHE LUFTHANSA: Moody's Rates New Sub. Hybrid Notes 'Ba1'
-------------------------------------------------------------
Moody's Ratings has assigned a Ba1 long-term subordinated rating to
the proposed subordinated hybrid note (the Hybrid) to be issued by
Deutsche Lufthansa Aktiengesellschaft (Deutsche Lufthansa).
Deutsche Lufthansa's existing ratings and its stable outlook remain
unaffected.

RATINGS RATIONALE

The Ba1 rating assigned to the Hybrid is one notch below Deutsche
Lufthansa's Baa3 long-term issuer rating reflecting that this
subordinated debt instrument ranks junior to all senior debt
obligations but senior to all classes of share capital as well as
any subordinated obligations of Deutsche Lufthansa, including the
company's existing hybrid.

In Moody's view, the Hybrid has equity-like features that allow it
to receive Basket 'M' treatment (please refer to Moody's Hybrid
Equity Credit methodology published in February 2024), i.e. 50%
equity credit and 50% debt for financial leverage purposes. The
features of the Hybrid include (1) the optional coupon deferral
with mandatory settlement of arrears of interest following a period
of five years; (2) a contractual maturity of 30 years; and (3) no
step-up in coupon prior to year 11 and the step-up will not exceed
a total of 100 basis points thereafter.

As the Hybrid's rating is positioned relative to another rating of
Deutsche Lufthansa, a change in either (1) Moody's relative
notching practice; or (2) the Baa3 issuer rating of Deutsche
Lufthansa, could affect the rating of the Hybrid.

Deutsche Lufthansa's ratings, including its Baa3 long term issuer
rating and stable outlook, remain unaffected, but are currently
weakly positioned. These ratings are supported by its leading
position in the European airlines sector which was recently
strengthened by the minority stake acquisition of ITA approved by
the European Commission. The acquisition will provide a cost
competitive hub in Rome and new routes towards African and South
American destinations in a context of strong competition coming
from Asia. In addition, the ratings are backed up by strong
liquidity. The company is committed to reduce its financial
indebtedness whilst maintaining its public liquidity corridor of
EUR8 to 10 billion, including a committed revolving credit facility
of EUR2.5 billion. However, Moody's expect Deutsche Lufthansa to
end the year with weaker than anticipated credit metrics for the
fiscal year 2024. For the last twelve months ended in September,
Moody's adjusted gross leverage is 4.1x because of very weak
results of its Deutsche Lufthansa Airlines brand due to severe
strikes in the second quarter, pressure on yields, strong
competition on Asian routes and by inefficiencies in flight
operations. Deutsche Lufthansa recently announced a turnaround
program which the company expects to bring EBIT benefits of EUR1.5
billion by 2026 from revenue effects and an optimization of the
cost base. Moody's anticipate leverage to improve in the next 12-18
months. However, this will be dependent on the effectiveness of its
turnaround program to align the Deutsche Lufthansa Airlines segment
to the rest of the Group targeted EBIT margin of 8%.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's view that Deutsche Lufthansa's
financial profile will gradually strengthen over the next 12 -- 18
months, supported by strong demand in the European airline market
and the benefits from Deutsche Lufthansa's structural progress in
terms of cost reductions supported by strong MRO contribution. The
stable outlook also encompasses the expectation that Deutsche
Lufthansa will maintain its prudent financial policy and focus on
deleveraging.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

A higher rating would require a prolonged period of proven
resilience and sustainable performance through the industry cycle.
Quantitatively, there could be positive rating pressure for
Deutsche Lufthansa if:

1) gross adjusted leverage falls sustainably below 2.0x;

2) the retained cash flow (RCF)/debt metric increases materially
above 35%; and

3) the adjusted EBIT margin is maintained at least double-digit in
percentage terms, indicating resilience to competitive pressures,
and

4) the company maintains its strong liquidity.

The rating could come under negative pressure if

1) gross adjusted leverage is sustained above 3.0x, or

2) the RCF/debt metric falls below 25%, or

3) Funds from operations plus interest-to-interest is sustained
below 6x, or

4) Any deterioration in its liquidity profile below the defined
corridor between EUR8.0-10.0 billion or weakening of its prudent
financial policy.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Passenger
Airlines published in August 2024.

COMPANY PROFILE

Deutsche Lufthansa Aktiengesellschaft, headquartered in Cologne,
Germany, is the leading European airline in terms of revenue.
During the 12 months ended September 2024, it generated revenue of
EUR36.9 billion and a Moody's adjusted EBITDA of EUR4.1 billion.

The company's revenue is derived principally from three business
segments: Passenger Airlines (Lufthansa German Airlines, Swiss,
Austrian Airlines, Brussels Airlines and low cost airline
Eurowings); Logistics, a cargo provider focusing on the
airport-to-airport business; MRO, a supplier of maintenance, repair
and overhaul services for civil aircraft.

In the first nine months 2024, Deutsche Lufthansa carried 101
million passengers on 755k flights. Pre-pandemic the route network
of the company's Network Airlines comprised around 273 destinations
in 86 countries. As of September 2024, the company's fleet
consisted of 731 aircraft, with an average age of around 14 years.



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S W E D E N
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PMD DEVICE: Files for Bankruptcy in Ireland and Sweden
------------------------------------------------------
The Board of PMD Device Solutions AB (publ) filed for bankruptcy
following extensive reviews of the company's financial position, in
parallel with the bankruptcy filing of its Irish subsidiary, PMD
Device Solutions Limited.

The Board's decision follows a detailed assessment of the financial
circumstances affecting both the parent company and its Irish
subsidiary. Key factors include:

* The Irish subsidiary has been prevented from resolving its
intended short-term liquidity requirement. This stems from delayed
payments from a major public sector client and the subsequent
decision of tax authorities not to approve a payment plan and
release of revenues that would allow operations to continue in a
sustainable way. After discussions with critical creditors, no
other solution has been made available to the Company.

* Without access to short-term liquidity, the Irish subsidiary has
been unable to meet critical obligations, including payroll,
effectively halting operations. This has directly impacted the
parent company's ability to continue as a going concern.

"Despite exhaustive efforts to secure short-term liquidity and
maintain operational continuity, we have been unable to overcome
the financial challenges facing PMD Device Solutions. This
situation has left us no choice but to proceed with coordinated
bankruptcy filings for both the parent company in Sweden and our
subsidiary in Ireland," said Myles Murray, CEO. "While this is a
deeply unfortunate outcome, we are committed to handling this
process with the utmost transparency and in accordance with all
applicable regulations to protect the interests of our
stakeholders."

PMD Device Solutions AB develops and sells medical products for
respiratory monitoring in both the hospital acute monitoring sector
and the remote monitoring homecare sector. Its primary product is
RespiraSense, a solution used for monitoring respiratory rate to
support the detection of patient deterioration early and to avoid
preventable respiratory failure and adverse patient outcomes.
RespiraSense is a novel technology that is commercialised in
Europe, the UK, and FDA cleared in the US. The company's shares are
listed on Nasdaq First North Growth Market (STO: PMDS).

PMD Device Solutions was suspended from trading on First North
following the announcement that the company has filed for
bankruptcy, according to marketscreener.com.




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U N I T E D   K I N G D O M
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DANCING LEOPARD: Plunges Into Administration
--------------------------------------------
business-sale.com reports that Dancing Leopard Clothing has dropped
into administration with Andrew Fender of Sanderlings appointed as
administrator on December 19.

According to its most recent filing to Companies House for the year
to March 31, 2023, the company had net current assets of
GBP843,226, down from the previous year's total of GBP984,326,
business-sale.com relates.

In the report, the directors said they were aware that "cash in the
company has declined significantly in the current year following a
decrease in turnover and increase in expenses due to an operational
change. The directors are happy that the company have resolved
these issues and have been profitable for the final months. The
company's cash flow has become more stable, however the directors
note it will take time to build back the working capital."

Walsall-based Dancing Leopard Clothing is an India inspired online
fashion brand founded in 2009 by Jade Hildreth and Jack Burrows.

EVANS TEXTILE: Appoints BDO as Administrators
---------------------------------------------
Evans Textile (Sales) Limited fell into administration in December,
with Kerry Bailey and Mark Thornton of BDO appointed as joint
administrators, reports business-sale.com.

In accounts for the year to April 30, 2023, the group reported
turnover of GBP18.2 million, down slightly from GBP18.7 million a
year earlier, while falling from a post-tax profit of around
GBP476,000 to a loss of nearly GBP1.8 million, says the report.

According to business-sale.com, the group's directors stated that
the business had been impacted by continuing inflationary pressures
and economic uncertainty.

At the time, its non-current assets were valued at GBP1.5 million
and current assets at GBP7.1 million, with net assets amounting to
approximately GBP694,000, the report adds.

Evans Textile (Sales) Limited is a Manchester-based manufacturer of
soft furnishings and window hardware trading under the Evans
Textiles, Bridstock Gate Limited and William Clark & Sons Limited
brands.


GB EYE: Begbies Traynor Named as Joint Administrators
-----------------------------------------------------
business-sale.com reports that GB Eye Limited fell into
administration last December, appointing Robert Dymond, Kris
Wigfield and Phil Stone of Begbies Traynor as joint
administrators.

The report relates that in accounts for the year to December 31,
2023, the company reported turnover of around GBP9.4 million, up
slightly from GBP9.2 million a year earlier, but saw its post-tax
losses widen from GBP2.1 million to GBP3.6 million.

According to business-sale.com, the company's directors stated that
the year had "presented significant difficulties in reaching the
goals set out in the strategic plan," citing increasing product
costs and rising overheads following an expansion in
infrastructure.

At the time, its fixed assets were valued at slightly over
GBP880,000 and current assets at around GBP7 million. However, its
net liabilities at the time exceeded GBP3.6 million, the report
relays.

GB Eye Limited is a poster manufacturer based in Barnsley.


HUBOO TECHNOLOGIES: Interpath Named as Administrators
-----------------------------------------------------
business-sale.com reports that Huboo Technologies Limited fell into
administration last December with Christopher Pole and Ryan Grant
of Interpath Advisory appointed as joint administrators.

The group's most recent accounts were for the year to September 30
2022, during which period it increased its revenues by 40 per cent
from around GBP13.8 million to GBP17.7 million, says the report.
However, its post-tax losses soared from approximately GBP13.4
million to GBP47.1 million.

At the time, its fixed assets were valued at GBP7.8 million and
current assets at GBP36.3
million, with net assets amounting to GBP13.7 million, the report
adds.

Huboo Technologies Limited is an e-commerce fulfillment provider
based in Bristol.

PETROFAC LTD: Restructuring Plan Hearing Scheduled for Jan. 28
--------------------------------------------------------------
Petrofac Limited is undertaking a financial restructuring by way of
a Restructuring Plan under Part 26A of the UK Companies Act 2006.

Part of that process involves the settlement and compromise of any
and all claims of shareholders against Petrofac arising out of, or
in connection with, alleged misleading statements and dishonest
omissions purported to have been made in Petrofac and its
subsidiaries' published information between October 7, 2005 and
October 5, 2021, as a result of the commission (or risk) of
historical instances of bribery and/or failure to prevent those
instances, whether pursuant to s90A or Schedule 10A of the
Financial Services and Markets Act 2000 or otherwise. .

These issues have been addressed by Petrofac, which is committed to
maintaining the highest ethical standards and standards of
corporate governance. While Petrofac does not accept that it is
liable to pay the sums claimed in the claims and would defend them
robustly if they proceeded, the compromise of those claims in
return or a share in a settlement fund of GBP1 million is required
as part of its Restructuring Plan.

Therefore, if you are currently a shareholder of Petrofac or
acquired, held or disposed of shares in Petrofac between October 7,
2005 and October 5, 2021 then you may be entitled to participate in
the restructuring. The first hearing is due to take place on
January 28, 2025.

Further information on the Restructuring Plan is set out in a
Shareholder Practice Statement Letter that Petrofac published on
December 23, 2024 in accordance with the Court's practice statement
for restructuring plans. The Shareholder PSL is available at
https://deals.is.kroll.com/petrofac-fsma-shareholders


STO LIMITED: Grant Thornton Appointed as Administrators
-------------------------------------------------------
Sto Limited fell into administration in December, with Stuart
Preston and Julie Tait of Grant Thornton appointed as joint
administrators, according to business-sale.com.

In the year to December 31, 2023, the company reported turnover of
GP15.8 million, up from GBP13.2 million a year earlier, but saw its
post-tax profits fall from GBP818,548 to GBP494,471 -- with
directors saying that anticipated falls in construction products
and raw materials costs had not been realized during the year, the
report notes.

At the time, its fixed assets were valued at GBP1.2 million and
current assets at GBP6.2 million, with net assets amounting to
GBP3.5 million, the report says.

Sto Limited is a provider of thermal insulation and facade
finishes.

YEOH SAXTON-PIZZIE: Fell Into Administration
--------------------------------------------
Yeoh Saxton-Pizzie Limited fell into administration earlier in
December, with Guy Hollander and Patrick Lannagan of Forvis Mazars
appointed as joint administrators, reports business-sale.com.

In accounts for the year to March 31, 2023, says the report, the
company reported turnover of GBP35.5 million, up from GBP29.8
million a year earlier, while cutting its post-tax losses from
GBP1.8 million to GBP1.2 million. At the time, its fixed assets
were valued at GBP2.1 million and current assets at GBP6.7 million,
but net liabilities amounted to nearly GBP2.7 million.

Earlier this year, the company parted ways with CEO Martin Sandler,
with founder Carl Saxton-Pizzie retaking the role as part of
turnaround plan aimed at reducing the company’s operational
footprint and improving its cashflow position, the report notes.

Yeoh Saxton-Pizzie Limited is a food wholesaler trading as
Wholegood.




===============
X X X X X X X X
===============

[*] BOOK REVIEW: Bailout: An Insider's Account of Bank Failures
---------------------------------------------------------------
Bailout: An Insider's Account of Bank Failures and Rescues

Author: Irvine H. Sprague
Publisher: Beard Books
Soft cover: 321 pages
List Price: $34.95
Order your personal copy at
https://ecommerce.beardbooks.com/beardbooks/bailout.html

No one is more qualified to write a work on this subject of bank
bailouts.  Holding the positions of chairman or director of the
Federal Deposit Insurance Corporation (FDIC) during the 1970s and
1980s, one of Sprague's most important tasks was to close down
banks that were failing before they could cause wider damage.  The
decades of the 1970s and '80s were times of high interest rates for
both depositors and borrowers.  Rates for depositors at many banks
approached 10%, with rates for loans higher than that.  The fierce
competition in the banking industry to offer the highest rates to
attract and keep depositors caused severe financial stress to an
unusually high number of banks. Having to pay out so much in
interest to stay competitive without taking in much greater
deposits was straining the cash and other assets of many banks. The
unprecedented high interest rates also had the effect of reducing
the number of loans banks were giving out. There were not so many
borrowers willing to take on loans with the high interest rates.
With the disruptions in their interrelated deposits and loans, many
banks began to engage in unprecedented and unfamiliar financial
activities, including investing in risky business ventures.  As
well as having harmful effects on local economies, the widely
reported troubles of a number of well-known and well-respected
banks were having a harmful effect on the public's confidence in
the entire banking industry.

Sprague along with other government and private-sector leaders in
the banking and financial field realized the problems with banks of
all sizes in all parts of the country had to be dealt with
decisively.  Action had to be taken to restore public confidence,
as well as prevent widespread and long-lasting damage to the U.S.
economy.  Sprague's task was one of damage control largely on the
blind.  The banking industry, the financial community, and the
government and the public had never faced such a large number of
bank failures at one time. The Home Loan Bank Board for the
savings-and-loans associations had allowed these institutions to
treat goodwill as an asset in an effort to shore up their
deteriorating financial situations with disastrous results for
their depositors and U.S. taxpayers.  Such a desperate stratagem
only made the problems with the savings-and-loans worse.  The banks
covered by the FDIC headed by Sprague were different from these
institutions. But the problems with their basic business of
deposits and loans were more or less the same. And the cause of the
problem was precisely the same: the high interest rates.

Faced with so many bank failures, Sprague and the government
officials, Congresspersons, and leaders he worked with realized
they could not deal effectively with every bank failure. So one of
their first tasks was to devise criteria for which failures they
would deal with.  Their criteria formed what came to be known as
the "essentiality doctrine." This was crucial for guidance in
dealing with the banking crisis, as well as for explanation and
justification to the public for the government agency's decisions
and actions. Sprague's tale is mainly a "chronicle [of] the
evolution of the essentiality doctrine, which derives from the
statutory authority for bank bailouts." The doctrine was first used
in the bailout of the small Unity Bank of Boston and refined in the
bailouts of the Bank of the Commonwealth and First Pennsylvania
Bank.  It then came into use for the multi-billion dollar bailout
of the Continental Illinois National Bank and Trust Company in the
early 1980s.  Continental's failure came about almost overnight by
the "lightening-fast removal of large deposits from around the
world by electronic transfer."  This was another of the
unprecedented causes for the bank failures Sprague had to deal with
in the new, high-interest, world of banking in the '70s and '80s.
The main part of the book is how the essentiality doctrine was
applied in the case of each of these four banks, with the
especially high-stakes bailout of Continental having a section of
its own.

Although stability and reliability have returned to the banking
industry with the return of modest and low interest rates in
following decades, Sprague's recounting of the momentous activities
for damage control of bank failures for whatever reasons still
holds lessons for today.  For bank failures inevitably occur in any
economic conditions; and in dealing with these promptly and
effectively in the ways pioneered by Sprague, the unfavorable
economic effects will be contained, and public confidence in the
banking system maintained.

As chairman or director of the FDIC for more than 11 years, Irvine
H. Sprague (1921-2004) handled 374 bank failures.  He was a special
assistant to President Johnson, and has worked on economic issues
with other high government officials.



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S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.

Copyright 2025.  All rights reserved.  ISSN 1529-2754.

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