Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Protecting Bank Debt Would Cost EU Taxpayers, Report Says

Don't Miss Out —
Follow us on:

July 31 (Bloomberg) -- Protecting senior unsecured bank debt may cost “more than EU taxpayers can bear” and investors should be liable for their decisions, a committee of advisers to the European Systemic Risk Board said in a report today.

“The examples of Ireland and Spain suggest, already at the national level, that the full protection of all senior creditors may exceed the government’s fiscal capacity,” the Advisory Scientific Committee said in the report on its website.

The committee also is “concerned” about the recapitalization of Spanish banks without determining the actual losses of the banks first.

“Adding capital without knowing what the assets are actually worth and how much capital is really needed entails a serious risk that the funds may simply be lost as the necessary resolution of the banks is delayed further,” according to the report.

The committee supported the creation of a European bank supervisor and a European Resolution Authority to deal with failing lenders. The authority should be financed primarily by a levy on banks, the committee said.

The European Systemic Risk Board was set up in January 2011 to help detect risks in the financial system.

To contact the reporter on this story: Allison Connolly in Frankfurt at aconnolly4@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.