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Under hidden choice of risk, private information on returns, limited commitment by the banker and costly liquidation, the paper first characterizes the optimal incentive-feasible allocation, and then demonstrates that the optimal allocation is implementable through the combination of a risk-based deposit insurance premium and a book-value capital regulation with prompt and stochastic termination/bailout rather than deterministic termination with no bailout as in PCA. It also shows that partial termination can be used instead of stochastic termination.