The concept of a good bank and a bad bank is about creating focus and clarity in financial strategy. In times of distress, banks with troubled assets often divide themselves into two entities: the “bad bank,” which takes on high-risk, non-performing assets, and the “good bank”, which retains healthy, low-risk assets. This separation allows each entity to focus on its specific goals and challenges.
The bad bank has a clear mandate to manage, restructure, or dispose of toxic assets without affecting the operations of the more profitable segments. It becomes a focused unit dedicated to handling risks and maximizing the recovery of value from distressed assets. The good bank can concentrate on its core, stable business operations, free from the burden of problematic assets. This focus enables the good bank…
You're reading a preview of
I by IMD (Digital) - 1 Issue, 17. March 2025