Germany has dropped the term 'subordinated’
from a proposed law that will change the hierarchy of
liabilities in insolvency and resolution.
The last-minute change, ahead of an upcoming vote in
parliament, is aimed at addressing criticism of an earlier
version of the Single Resolution Mechanism (SRM) law by the
European Central Bank (ECB).
version was published on Wednesday last week. It was
approved by the first chamber of the German parliament, the
Bundestag, the next day, following a second and third reading
both taking place in the afternoon.
Despite the change in the wording, the proposal still
achieves the main purpose of allowing senior subordinated
instruments to qualify for total loss absorbency capacity
(TLAC) purposes, according to lawyers who have analysed the
Conflicts with TLAC
The new TLAC standard is currently being developed
under leadership of the Financial Stability Board (FSB). It
will apply to the...