Recovery sparks spate of distressed asset sales

Bad banks and ring-fenced legacy assets remain big parts of the structured credit market. With a rebound in prices and soaring capital charges, there is speculation the pace of asset sales could speed up. Mark Pengelly reports

Shifting so-called toxic assets into bad banks became a lifeline for financial institutions during the crisis. With many banks all but crippled by mounting losses on distressed assets during the worst of the upheaval, the ability to transfer them to special-purpose vehicles (SPVs) or other ring-fenced entities, and therefore gain protection from further mark-to-market volatility, helped restore confidence to the financial sector.

“A bad bank is a great concept, because it releases the remaining