18/05/2026
A recurring pattern in every crisis I have analysed is the uneven distribution of losses: some actors absorb severe damage while others experience only limited impact. In the case of Overend Gurney & Company, the firm itself (meaning the shareholders) suffered catastrophic losses, yet the contagion extended far beyond the institution. Many organisations dependent on its lending from the firm were destabilised simply because of the bank’s size and interconnectedness. The Bank of England showed limited willingness to intervene, but a more structured approach—one that distinguished between viable and non viable institutions—could have mitigated the wider economic fallout.
A similar dynamic emerged during the 2013 collapse of Cyprus Popular Bank and Bank of Cyprus, during the 2013 Cyprus crisis, where the consequences reached almost every household and business. The government’s priority at the time appeared to be the protection of political and institutional peers, despite serious and repeated governance failures. The restructuring process—shutting down Cyprus Popular Bank, transferring selected assets to Bank of Cyprus, and later closing the Cooperative Group—effectively concealed misconduct while shifting the financial burden onto the public. Tax free provisions for banks contrasted sharply with the lack of recovery mechanisms for citizens, who continue to bear the long term costs without equivalent support.
Across these cases, the underlying issue is the same: institutional incentives and management priorities differ sharply across countries and periods, shaping who absorbs the losses and who is shielded from them. When governance structures favour specific groups, the economic burden is redistributed—often unfairly—onto those with the least influence. Understanding these patterns is essential for designing policies that protect the broader public interest and prevent the repetition of past failures.
