Draghi Says Bank-Aid Rules Must Be Flexible on Forced Losses

European Central Bank President Mario Draghi said banks should be able to access public aid without wiping out junior bondholders if regulators decide a lender needs more capital and isn’t on the brink of failure.

Draghi urged the European Union to make clear when it will allow exceptions to state-aid rules that require private-sector creditors to take losses before government backstops can step in. He said public capital needs to be available -- without wiping out subordinated debt holders -- if a bank’s holdings are above regulatory minimums and also below what supervisors deem necessary in a particular case.