BAD BANK Meaning and
Definition
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A "bad bank" is a financial institution or a specific segment within a bank created to hold and manage distressed or non-performing assets. It is typically established when a bank is facing significant financial difficulties, such as high levels of toxic loans, non-performing loans, or troubled assets. The purpose of a bad bank is to segregate these distressed assets from the healthy portfolio of a bank, allowing the main bank to continue its regular functioning and lending activities.
The bad bank operates independently, often under a different management team, to handle the problematic loans and assets. Its primary objectives are to maximize recoveries on these distressed assets, either through restructuring, selling, or winding down. The bad bank may employ various strategies like loan workouts, debt restructuring, or initiating legal actions to recover the outstanding amounts owed.
By transferring the non-performing assets to the bad bank, the main bank can reduce its risk exposure and focus on its core activities without being burdened by the weight of problematic loans. This separation helps in isolating the distressed assets, preventing their negative impact from spreading to the bank's overall financial health.
Typically, bad banks are set up as temporary entities, aiming to resolve the toxic assets and eventually wind down operations. However, they can also continue as ongoing entities, managing and disposing of the non-performing assets of multiple banks or as a centralized unit within a regulatory authority.
Common Misspellings for BAD BANK
- vad bank
- nad bank
- had bank
- gad bank
- bzd bank
- bsd bank
- bwd bank
- bqd bank
- bas bank
- bax bank
- bac bank
- baf bank
- bar bank
- bae bank
- bad vank
- bad nank
- bad hank
- bad gank
- bad bznk
- bad bsnk
Etymology of BAD BANK
The term "bad bank" originates from the combination of the adjective "bad" and the noun "bank".
The adjective "bad" dates back to Old English, where it was originally spelled as "bæddel" meaning "effeminate man" or "hermaphrodite". Over time, its meaning evolved to describe something as inferior, unpleasant, or undesirable.
The word "bank" has a different etymological background. It comes from the Middle English word "banke", which was derived from the Old Italian word "banca" meaning "bench" or "counter". This is because early banks used benches or counters to conduct financial transactions.
The term "bad bank" emerged during the global financial crisis of 2007-2008. It refers to a financial institution that holds non-performing or toxic assets, such as bad loans or troubled investments.
Similar spelling words for BAD BANK
- being bowed,
- bing beauty,
- bunk, beat,
- bada-bing bada-boom,
- PTE BANK,
- being paid,
- bada bing,
- bit bang,
- pate-pink tone,
- paying put,
- put buying,
- bunk bed,
- being petty,
- peat bank,
- put bank,
- being bad.
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