The Bank Recovery and Resolution Directive, a single set of rules for resolution agreed by European leaders in June,
requires that investors suffer losses equivalent to 8% of a bank’s total liabilities before national authorities can step in.
FRANKFURT–The new bank resolution bail-in provisions should start in 2015, three years earlier than currently proposed, an executive board member of the European Central Bank said Thursday.
To ensure that Europe is able to restructure and wind down troubled banks effectively, it needs all the tools of resolution at its disposal from the start, ECB Executive Board Member Yves Mersch said at a conference in Frankfurt.
While the ECB-based bank supervisor and a common European resolution authority are slated to be in effect by 2015, the rules dictating how much shareholders, bondholders and then uninsured depositors must contribute if a bank needs to be resolved are currently only applicable from 2018.
“I favor bringing forward the entry into force of bail-in,” Mr. Mersch said, according to a copy of his speech provided by the ECB. “We should push for a start date of 2015 for bail-in so that we have the full resolution toolbox available from the outset.”
Now Eurogroup Working Group’s leader Thomas Wieser has revealed that the the eurozone should introduce bank bail-in rules from 2016.
According to a report in German publication Der Spiegel, Wieser called on authorities in the European Union to bring forward the 2018 deadline for the bail-in policy, in order to strengthen the continent’s banking system.
From Banking Techonology
Recovery and resolution plans have been on the minds (and to-do lists) of ops and tech departments at the world’s biggest banks ever since they were mandated by the G20 in 2011.
Recovery & Resolution: the operational effects of bail-in