An Bridge Bank, in the context of Bank Resolution is a resolution technique that allows a weak bank to continue its operations until a permanent solution can be found.
The weak bank is closed by the chartering authority and placed under liquidation. A new bank, referred to as a bridge bank, is chartered and controlled by the liquidator according to statutory or legislative provisions. It is designed to “bridge” the gap between the failure of a bank and the time when the liquidator can evaluate and market the bank in such a manner that allows for a satisfactory acquisition by a third party.
- BCBS, Supervisory Guidance on Dealing with Weak Banks, March 2002