Speech by the Governor, delivered at the Annual Assembly of the Bundesverband deutscher Banken in Bonn on 14 December 1981
- In the difficult economic circumstances of recent years, banks have been moving closer to their customers, both corporate and national, and this process should be built on.
- If a company's problems are deep-rooted and permanent, 'the banker or company that is not realistic and firm about corrective action will be acting neither in the interest of shareholders nor of the wider domestic economy.'
- Banks cannot aspire to the same relationships with sovereign borrowers as with corporate customers. Official international institutions such as the International Monetary Fund must take the lead if economic adjustment programmes are needed to restore creditworthiness.
- Up to now, cases of bank rescheduling for heavily borrowed countries, although increasing, have not created anxiety about the ability of the banking system to handle them. 'A more widespread difficulty could, however, arise if a failure to agree on a rescheduling were to lead to a default or moratorium which caused banks to react defensively towards other indebted countries. '
- 'Banks must of course consider carefully whether the difficulties faced by a company--or a country-are transient, or whether ... they reflect fundamental maladjustment or mismanagement. But banks do not withdraw support from a range of companies merely because one of them is in difficulty; nor should they do so from a range of countries, just because one may be forced to reschedule. '