The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Bank bail-ins struggle to find the right balance

As the G20 seeks to install a permanent resolution mechanism to enable burden sharing between the private and public sectors in any future financial crisis, investors and banks are in a state of flux. Pricing bank debt securities that convert into equity in times of stress is problematic, if they are investable at all. Hamish Risk reports.

BY MID-2011 the Basle Committee for Banking Supervision in coordination with the Financial Stability Board is expected to complete a study that will determine how much, and in what form, bank capital will be required to act as a shock absorber for the so-called "global systemically important financial institutions (G-Sifis)." Running parallel to this, the FSB will also examine the viability of contractual and statutory bail-ins, before the two groups make their final recommendations by the end of 2011.

For fixed-income investors, the implications are huge. In a future crisis don’t expect to be repaid in full. Political pronouncements are unequivocal.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree