Hong Kong Regulator Reassures Creditors on Resolution Hierarchy
- HKMA says shareholders will be the first ones to absorb losses
- Move follows Canada, Europe after Credit Suisse action
This article is for subscribers only.
The Hong Kong Monetary Authority reassured investors that subordinated debt holders have priority over shareholders when banks are being wound up, in a response to media inquiries regarding creditor hierarchy in the Asian financial hub.
Under the Financial Institutions (Resolution) Ordinance, there is a clear order in which shareholders and creditors would bear losses, HKMA said in a statement Wednesday. That means shareholders are the first ones to absorb losses, followed by holders of capital instruments including additional tier 1 and tier 2 capital, the statement added.