HK bail-in regime offers flexible resolution

Author: Brian Yap | Published: 28 Oct 2015

Counsel in Hong Kong have defended the territory’s proposed bail-in regime against suggestions that bondholders receive insufficient protection. They argue that it would lend greater flexibility to bank resolution.  

In a press release published on the 15th, Moody’s dismissed the resolution regime as credit negative for non-deposit senior unsecured creditors, citing them as sole bearers of losses in future bail-ins.         

But local counsel have pointed to the flexibility of the territory’s drafted bail-in regime in maintaining financial stability, with all types of  creditors, except depositors, having been included in it.

"The fact that senior unsecured debt is not excluded simply provides an option to the financial institution and to the authorities to use that means by which to improve or shore up the balance sheet," said David Kidd, partner at Linklaters in Hong Kong.