Whenever the financial crisis happen the concept of bad banks becomes common. In 2009 during the sub-prime crisis so called blogLehman crisis the concept of bad banks was very famous.

As per the information from Bloomberg:

The Bank of Portugal unveiled a 4.9 billion-euro ($6.6 billion) bailout over the weekend that will leave shareholders and junior bondholders with losses, while sparing senior creditors and unsecured depositors. Banco Espirito Santo, once the country’s largest lender by market value, will be split in two, with depositors and healthy assets joining the newly formed Novo Bank while bad loans and junior creditors stay with the old bank until it can be shut down.

“To regulators in Frankfurt and Brussels, this must have seemed the safest way to isolate any residual and tail risks” related to the bank’s Angolan unit and loans to other parts of the Espirito Santo group, Citigroup Inc.
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