Brussels plans bondholder ‘bail-ins’

Following the publication of a Communication on 20 October 2010 on a European crisis management framework for the financial sector, the European Commission launched in January 2011 a consultation on technical details underpinning that framework.

The Commission intends to come forward with a legislative proposal for a comprehensive framework for dealing with failing banks before the Summer of 2011. The deadline for contributions to this consultation is 3 March 2011.

Banks’ senior bondholders should share the pain of bank failures to spare taxpayers from bailing them out, the European Commission suggested in the consultation.

European Commission: Press Release, IP/11/10: Commission seeks views on possible EU framework to deal with future bank failures http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/10&format=PDF&aged=0&language=EN&guiLanguage=en

EUObserver, 7.1.11: Brussels wants bondholders to help pay for future bank failures http://euobserver.com/9/31606

EurActiv, 7.1.11: EU wants bond holders to share pain of bank failure http://www.euractiv.com/en/euro-finance/eu-wants-bond-holders-share-pain-bank-failure-news-501055

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