What is waste bank?

This is a derogatory Dutch term for what is known in the financial world as a 'bad bank'. A 'waste bank' (afvalbank) is an entity established to take over the problematic or non-performing assets of a financial institution. By separating these bad assets, the original bank can concentrate on healthy activities and clean up its balance sheet.

The concept of a 'waste bank' is often applied during financial crises to stabilise banks and to prevent these institutions from going bankrupt due to their bad loans or worthless assets. The term is sometimes also used in the Netherlands as 'rubbish bank' (vuilnisbank), which emphasises the negative perception of the role of these entities.

This concept is closely linked to the way in which financial markets and governments try to manage large losses in the financial sector and guarantee the stability of the banking system.