Zombie bank

A zombie bank is a special case of a zombie company. It is a financial institution that has a net worth of less than zero. Usually, such companies file for bankruptcy. Like a zombie company, the zombie bank is still able to pay the short-term liabilities (such as the interest on its loans). It doesn't have enough money to repay the loans, though. If the interest rates are low, this will help zombie banks. Zombie banks, like zombie companies can be saved from bankruptcy, but usually they need a large (and costly) reorganization.

The term zombie bank (and zombie company) was first used to refer to a period of Japanese economy, in the 1990s: This period is known as Lost Decades, today.
Category:Banks