Bank Failure

A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent, too illiquid to meet its liabilities or because the license of the bank is suspended or irrevocably revoked.

Bank failure is the first stage of the processes to liquidate the bank and is either managed by the Deposit Guarantee Scheme led by the central bank, external insurer or the FDIC.