Can state-owned enterprises get back their deposits

How will ADB support state-owned enterprise reform?

Supporting state-owned enterprise (SOE) reform and seeking to make SOEs “bankable” are long-standing goals of the Asian Development Bank (ADB). Under Strategy 2030, ADB is to promote SOE reform to help “access financing on commercial terms and conditions” and in “attracting private investors and bringing in commercial cofinanciers.”

Why are State-owned Enterprises (SOEs) important?

According to an IMF study, SOEs have increased in importance among the world’s largest corporations. Their assets now amount to $45 trillion, which is 50 percent of total global GDP. Many countries rely on SOEs to maintain employment and keep their economies moving.

Should depositors consider their deposits implicitly guaranteed by the state?

For example, depositors may consider their deposits implicitly guaranteed by the state. It may be necessary to introduce a form of limited deposit insurance prior to privatization of state-owned banks as a means of clearly signaling the end of an implicit guarantee.

Can state-owned banks operate on commercial terms?

Explicit or implied requirements to finance inefficient state-owned enterprises or directly finance government deficits can further impair the ability of state-owned banks to operate on commercial terms.

How much debt do state-owned enterprises have?

More than 800 state-owned enterprises with a combined market value of $5.3 trillion are listed on major stock exchanges. In emerging markets alone, the commercial debt of state-owned enterprises approaches $1.4 trillion. This is good news – except for when bad things happen.

Are state-owned banks required to finance loss-making enterprises?

There are multiple dimensions to these distortions. State-owned banks may be explicitly required or implicitly expected to finance loss-making state-owned enterprises, or provide financing on noncommercial terms to regions or sectors, or extend credit based on political connections rather than risk assessment.