Italy Puts Senior Bonds in Line for Losses Like Germany
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Italy is set to put senior unsecured bank bonds in line for losses, following Germany’s lead with a law that facilitates writedowns to prevent taxpayer bailouts.
The Treasury in Rome will soon amend the order in which a failed lender’s capital will be written off, giving corporate and bank deposits preference over senior bonds, according to a new law implementing the European Union’s Bank Recovery and Resolution Directive. Senior bonds would be wiped out right after equity and subordinated debt, according to the law.