A bridge bank is an institution created by a national regulator or central bank to operate a failed bank until a buyer can be found. While national laws vary, the bridge bank is usually established by a publicly backed deposit insurance organisation or financial regulator and may be instituted to avoid systemic risk and provide an orderly transition avoiding negative effects such as bank runs. Typically, the tasks of a bridge bank are to ensure seamless continuity of banking operations by: Assuming the deposits of and honouring the commitments of the failed bank, so that service to retail clients is not disrupted Servicing adequately secured existing loans to avoid their premature interruption or termination Assuming other existing assets, liabilities or functions of the defunct bank at the discretion of the regulator These tasks are carried out on a temporary basis (usually for no more than two or three years) to provide time to find a buyer for the bank as a going concern. If the bank cannot be sold as a going concern, its portfolio of assets are liquidated in an orderly fashion. Should the bridge bank fail to wind down its operations within the allotted time, the national deposit insurance corporation is appointed as the receiver of the bridge bank's assets. Operation by country Nigeria In Nigeria the (Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) administer the deposits and liabilities of a failed bank. Under the arrangement, the NDIC is authorized to operate a failed bank for a period until a buyer can be found for its operations. When in the opinion of CBN, a NDIC-insured bank is in financial trouble, the CBN and NDIC may establish a bridge bank to; Assume the deposits of the closed bank; Assume such other liabilities of the closed bank as the Deposit Insurance Corporation may determine to be appropriate; Purchase such assets of the closed bank as the Deposit Insurance Corporation may determine to be appropriate; and Perform any other temporary function which the Deposit Insurance Corporation may prescribe in accordance with this Act. Bridge banks are authorized to seek to liquidate failed banks, either by finding buyers for the bank as a going concern, or by liquidating its portfolio of assets, within two years, which can be extended by an additional year. Should the bridge bank fail to wind down its operations within the allotted time,