Further Guidance on Bail-in

On 14 May 2013, the Economic and Financial Affairs Committee of the EU Council published a press release following a debate on the proposed Recovery and Resolution Directive (RRD).  The discussion focused on the design of the bail-in tool, identified as a central issue.  A summary of the key points include:

  • General agreement on the scope for bail-in and a limited list of defined exclusions;
  • General agreement that the level of loss absorbing capacity must be adapted to match the scope of exclusions;
  • Agreement amongst most Member States that the deposit guarantee schemes (for deposits under EUR 100.000) should benefit from depositor preference (i.e. last category of assets to be bailed in);
  • Overall support for deposits over EUR 100.000 to also benefit from depositor preference (with some reservations towards preference given to large corporate deposits);
  • The need for a balance between a harmonised approach to bail-in and limited national flexibility in its application;
  • Country-specific concerns regarding euro area vs. non-euro area issues should be addressed.

The Council is expected to reconvene on 21 June, with the hope of reaching an agreement on the directive.

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