Handbook of Critical Issues in Finance
Show Less

Handbook of Critical Issues in Finance

Edited by Jan Toporowski and Jo Michell

This vital new Handbook is an authoritative volume presenting key issues in finance that have been widely discussed in the financial markets but have been neglected in textbooks and the usual compilations of conventional academic wisdom.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 2: Bad banks

David G. Mayes


The global financial crisis has led to a resurgence of interest in and indeed use of the concept of ‘bad banks’. In essence a bad bank is created when a troubled bank is divided into a ‘good bank’ that can readily be sold or recapitalized at a cost acceptable to the shareholders/creditors, and a ‘bad bank’ that contains the remaining, impaired, assets. Indeed the term ‘bad bank’ is actually a misnomer as the entity is not a bank in the sense that it is registered, takes deposits and makes loans. It is normally an asset management company that works through the impaired assets, steadily realizing them for the best it can manage for the creditors/owners. To take a well-known example, Northern Rock, the UK bank that got into difficulty early in the crisis in August 2007, and was subsequently nationalized, has

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.