For a bank, however, the biggest liability balance is likely to be deposits and other public borrowings.
Simplified balance sheet
In fact, you could simplify a bank's balance for the purpose of this discussion as being: bank's equity = loans, bills and other receivables, less deposits and other borrowings.
A loan becomes impaired when a mortgagee is in default, and particularly, when the bank is unable to sell the property at market value in order to recover the value of its loan.
So, in summary, it's not quite as simple as is often made out.