bad bank

plural bad banks

1. bankingA bank created to specialize in the ownership of defaulted loans and their collection.

   In the 1980s, another method of problem resolution emerged, known as a good-bank, bad-bank split model.

   1999, Benton E. Gup, International banking crises, page 249

   1 more example

   And Grant Street National Bank, as the bad bank is called, ... The bad bank and its 75 workout specialists proved adept at unloading sorry loans

   1992, Business Week

   Synonyms: collection bank