Bondholders targeted in EC bank bailout plans

Author: | Published: 11 Jan 2011
Senior bondholders could be required to shoulder the burden of losses of European banks in place of taxpayers, according to a consultation paper released by the EC.

Published on January 7 2011, the consultation paper suggests the introduction of “possible mechanisms to write down appropriate classes of the debt of a failing bank to ensure that its creditors bear losses”.

In a failure scenario, authorities could have the power to forcibly write-own debt or to transfer assets and liabilities of a failing bank to another institution or bridge...