34 Government Finance Statistics Manual 2014
that is, they do not administer or manage other
units. Such units are allocated to the fi nancial
corporations subsector and treated as captive
fi nancial institutions even if all the subsidiary
corporations are nonfi nancial. However, these
holding companies should be distinguished from
artifi cial subsidiaries and restructuring agencies
(see paragraphs 2.42 and 2.129, respectively).Restructuring Agencies
2.129 Restructuring agencies are entities set up to
sell corporations and other assets, and for the reor-
ganization of companies. Th ey may also serve for de-
feasance of impaired assets or repayment of liabilities
of insolvent entities, oft en in the context of a bank-
ing crisis. Th ese entities are known by various names,
such as restructuring corporations, privatization ve-
hicles, asset management companies, liquidation cor-
porations, bridge banks, or bad banks.
2.130 Some institutional units specialize in the re-
structuring of corporations, either nonfi nancial or
fi nancial. Th ese corporations may or may not be con-
trolled by government. Restructuring agencies may be
long-standing or created for this special purpose. Gov-
ernments may fund the restructuring operations in
various ways, either directly, through capital injections
(capital transfer, loan, or acquisition of equity), or indi-
rectly, through granting guarantees. If the restructuring
agency is controlled by government or another public
corporation, it is classifi ed in the public sector (see
Box 2.2). Whether a restructuring unit is part of the
general government sector or is a public corporation
is determined by whether it is a market or nonmar-
ket producer. Given that the economically signifi cant
price criteria may be insuffi cient for this purpose, the
following general criteria should be considered:^36- A unit that serves only government, or primarily
government, is more likely to be included as a non-
market producer within the general government
sector than one that serves other units as well. - A unit that sells or buys fi nancial assets at a value
other than market values is more likely to be in
the general government sector than not. - A unit that takes on low risks because it acts with
strong public fi nancial support and, by law or ef-
(^36) Th is is because restructuring units have, by nature, little output.
fectively, on behalf of the government, is likely
to be included within the general government
sector.
2.131 Th e following are two frequently observed
examples that provide further guidance in the classifi -
cation of restructuring agencies:
- A restructuring agency may undertake the reor-
ganization of public or private sector entities or
the indirect management of privatization. Two
cases may be considered:
Th e restructuring unit is a genuine holding
company controlling and managing a group
of subsidiaries, and only a minor part of its
activity is dedicated to channeling funds from
one subsidiary to another on behalf of the gov-
ernment and for public policy purposes. Th is
unit is more likely to be a market producer and
classifi ed as a fi nancial corporation, and the
transactions made on behalf of the government
rerouted through the general government unit
using the service provided.^37
Th e restructuring unit, whatever its legal sta-
tus, acts as a direct agent of the government
and is not a market producer. Its main function
is to redistribute national income and wealth,
channeling funds from one unit to the other.
Th e restructuring unit should be classifi ed in
the general government sector. - Another example of a restructuring agency is one
mainly concerned with impaired assets, mainly
in the context of a banking or other fi nancial cri-
sis. Such a restructuring agency must be analyzed
according to the degree of risk it assumes, con-
sidering the degree of fi nancing provided by the
government. Again, two cases may be considered:
Th e restructuring agency borrows on the mar-
ket at its own risk to acquire fi nancial or non-
fi nancial assets that it actively manages. In this
case the unit is more likely to be a market pro-
ducer and classifi ed as a fi nancial corporation.
Th e restructuring agency deliberately purchases
assets at above-market prices with direct or indi-
rect fi nancial support from the government. It is
primarily engaged in the redistribution of national
income (and wealth), does not act independently
(^37) Rerouting is described in paragraph 3.28.