Waste disposal is still a big part of post-crisis banking. A large amount of toxic securities and loans remains on banks' balance-sheets. After its bail-out Citigroup, for example, split itself into a “good bank” and a “bad bank” for operational purposes. The nasty bit still represents a fifth of the firm's assets and accounts for a third of its capital requirements. Two other rescued firms, Royal Bank of Scotland and Commerzbank, took a similar approach. Add in HSBC, too, which was not bailed out but which is running down a ringfenced portfolio of consumer and housing loans in America, and the total “bad-bank” assets in these four firms alone amount to nearly 1 trillion dollar.

The number of bad banks is actually going up. Bank of America announced this month that it would set up a new unit to manage the firm's soured mortgages. Many other firms have fiddlier arrangements. KBC, a bailed-out Belgian firm, still has some 25 billion euro (36 billion dollar) of notional exposure to collateralised-debt obligations, although it says these are largely written off or covered by a specific state guarantee. Barclays has an off-balance-sheet vehicle called Protium into which it dumped some 12.3 billion dollar of risky assets.

Bad banks are partly about slick presentation. Shareholders and creditors still own a single firm but feel more confident if they can see a consistently profitable division within it. Segregating assets can also concentrate managers' minds on the task of getting rid of the rubbish. Taking Citigroup, RBS, Commerzbank and HSBC together, bad-bank assets have fallen from 1.6 trillion dollar in early 2009 to almost 1 trillion dollar. Quarterly pre-tax losses on these holdings have dropped sharply (see chart).

The bigger concern is the time it takes to clean things up. Based on its experience last year, Citi's bad bank shrinks by only about 10% a year of its own accord as assets mature. RBS has suggested a similar rate of natural decline. So far most firms have achieved far faster rates of reduction by restructuring and selling bad assets, but some worry that the easy gains have now been made. HSBC has indicated that the sluggish American housing market will mean its portfolio may shrink more slowly that it once hoped, for instance.

Looming over all of this are the new capital rules. The unspoken goal of almost all firms is quickly to offload the remaining dodgy assets on their balance-sheets, thus releasing capital, to offset the higher overall capital standards being imposed on them. But the rate of natural shrinkage of their bad banks is low and the remaining dud assets are hard to sell at reasonable prices They're called toxic for a reason.