Bridge bank
A bridge bank is a tool available when an institution fails and there is no buyer or private-sector solution on the horizon. It is meant to “bridge” the gap between when an institution fails and when a buyer or private-sector solution can be found. CDIC can use this tool to take temporary control of the failed bank, transferring all or part of the bank’s business to the new “bridge bank,” which is temporarily owned by CDIC.
Customers of the failed bank automatically become customers of the bridge bank and continue to have access to their deposits and financial services. As owner, CDIC may appoint new board directors and executives to handle the efforts to restructure and stabilize the bank. Once stable, the bridge bank is sold to the private sector.
To learn more, consult our bridge bank backgrounder.