# Mini bad bank

- Canonical URL: https://www.gerhardmerk.de/mini-bad-bank
- Post ID: 587410
- Modified: 2023-07-25T21:03:18+00:00
- Language: en

## Definition

A proposal that arose in the course of the 2008 financial crisis, according to which every bank should split itself into a good and a bad part. The good part would serve the healthy business areas, while the bad part - a special-purpose entity or a newly established stock corporation with corresponding objectives - would take on toxic securities. The institutions would then have to - value their papers transferred to the in-house bad bank not necessarily at market prices and in a crisis even at distress sale prices, - which in a financial crisis leads to a high need for write-downs for the banks, - their balance sheets become unbalanced and - confidence in the financial market as a whole dwindles. - The idea of a mini-bad bank raises many questions, including the possible division of shares. - See bad bank, bank will, balance sheet adjustment, mark-to-market approach, mark-to-model approach, Mittelstandsbank, mandatory convertible bond, venture capital, sovereign wealth fund. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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