This paper presents a novel design algorithm for a filter bank structure that is suitable for photonic integrated circuits. The proposed design is entirely based on the principle of loss-exhibiting allpass filtering, which is a behavior naturally observed in a variety of microscale optical components. The setup and mathematical optimization of the system is explored in detail from a signal processing perspective, and an algorithm based on convex and nonlinear optimization techniques is subsequently presented. The algorithm methodologically utilizes the otherwise-undesirable effect of waveguide loss to derive an allpass-based filter bank structure that is amenable to photonic implementation. The proposed structure is ideal for applications in time-stretched analog-to-digital converters, WDM network channelizers, and general optical signal multiplexers.