Document Type

Case Study

Case Series

Broad-Based Asset Management Programs

JEL Codes

G01, G28


Following a large-scale deregulation of the financial sector during the 1980s and the subsequent massive credit expansion, a banking crisis in Finland caused a sharp contraction in the economy in the early 1990s. One of the key policy responses to the crisis was the creation of an asset management company called Arsenal in 1992. The original purpose of Arsenal was to absorb, manage, and liquidate the bad assets of the Savings Bank of Finland (an entity created by the government-forced merger of 41 of the country’s 81 savings banks). During the following years, Arsenal expanded to become a group of multiple asset management companies dealing with the bad assets of other failed entities. The Arsenal Group, as the group later came to be known, was ultimately responsible for managing more than FIM 40 billion (approx. $8.1 billion) in assets. By 1999 more than 90% of the assets had been wound down. Arsenal was not placed in liquidation until 2003, at which time losses had reached nearly FIM 20 billion. In the most recent available financial statements, Arsenal reported that it was down to one employee with just a handful of assets outstanding in domestic and foreign bankruptcy court that were expected to be finalized within three years, at which point Arsenal would be dissolved.

Date Revised