Purchase and Assumption: Difference between revisions
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A term used in the resolution of failed banks. | A term used in the resolution of failed banks. | ||
Simple P&A involves splitting a distressed bank into ‘good’ and ‘bad’ parts. | Simple P&A involves splitting a distressed bank into ‘good’ and ‘bad’ parts. | ||
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Services to insured depositors are sustained. | Services to insured depositors are sustained. | ||
The bad part of the failed bank goes into administration, with the administrators selling what they can and winding down the rest. | The bad part of the failed bank goes into administration, with the administrators selling what they can and winding down the rest. | ||
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== See also == | == See also == | ||
* [[Bad bank]] | |||
* [[Bridge Bank]] | * [[Bridge Bank]] | ||
* [[Deposit Guarantee Scheme]] | * [[Deposit Guarantee Scheme]] | ||
Revision as of 13:47, 28 October 2016
(P&A).
Bank resolution.
A term used in the resolution of failed banks.
Simple P&A involves splitting a distressed bank into ‘good’ and ‘bad’ parts.
The distressed bank’s deposit book is sold to a third party together with some cash injected by the Deposit Guarantee Scheme (DGS) and possibly other good assets.
The deposit book and cash might for a while be held in a Bridge Bank controlled by the Resolution Authority (RA), pending sale to a purchaser.
Services to insured depositors are sustained.
The bad part of the failed bank goes into administration, with the administrators selling what they can and winding down the rest.
