Page 17 - CDIC Company Profile Ebook

A. When the CDIC chooses a method for fulfillment of its insurance
responsibilities, it shall not be subject to the provision in the Deposit
Insurance Act which requires that the estimated cost to the CDIC must
be less than the estimated loss arising from the cash payout.
B. The CDIC may provide an insured institution with loans, deposits, or
other financial assistance when all the following conditions are met: the
institution is critically under-capitalized; the competent authority has
determined there is a need to either suspend and wind up the institution's
business or handle its withdrawal from the market by various resolution
methods; and prior to doing so, the competent authority has duly appointed
an agency to act as conservator or to take over the authorities of the
company's board of directors and supervisors.
C. When an insured institution is ordered by the competent authority to suspend
and wind up business, if the CDIC is unable to consult with other insured
institutions or financial holding companies to acquire or assume the
insured institution, it may set up a bridge bank to assume all or part
of the business, assets, and liabilities of the insured institution. The
duration of a bridge bank shall not last for more than two years.

(4) Advance payment to uninsured creditors
To meet the liquidity needs of the creditors of a failed insured institution,
the CDIC may, without increasing the costs incurred by the CDIC in taking
any action under Paragraph 1 of Article 28 of the Deposit Insurance Act, make
advance payments against claims filed by insured depositors in possession
of deposits beyond the maximum insurance coverage and by non-deposit
creditors based on the anticipated reimbursement ratio derived from an
evaluation of the values of assets of the failed insured institution. The aforesaid
sums of the advance payments shall be counted item-by-item on the basis of
the order of priority on the advance payment claims, and deducted first from
the amount finally realized from the liquidation and repaid to the CDIC.

(5) Handling of unresolved issues of failed insured institutions
A. If a failed insured institution still has remaining assets, pending litigation, or
other unresolved issues, the CDIC will continue handling those issues in
its capacity as a conservator or receiver.
B. For an institution under conservatorship, when it is determined that
the purpose of the conservatorship has been achieved, the CDIC will draft
a plan for termination of conservatorship and draw up a list of matters
requiring ongoing attention, and will file these with the competent authority
for approval, at which point the conservatorship will be terminated.
C. For an insured institution that the competent authority has ordered to
suspend and wind up its business operations, the CDIC will handle business
wind-up procedures in accordance with the wind-up provisions of the
Banking Act. When it is determined that the business wind-up has been
completed, the CDIC will submit a report to the competent authority
for revoking the institution's business license and extinguish its legal
personality.

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