EU Council Reaches Agreement on Bail-In Rules

The FT is reporting that EU Council finalised bail-in rules early this morning, agreeing that:

  • as expected, insured deposits under EUR 100,000 will be exempt, and uninsured deposits of individuals and SMEs will be given preferential status;
  • a minimum of 8% of total liabilities must be bailed-in before resolution funds can be used, whilst above this level, the use of resolution funds will be capped at 5% of total liabilities and will require EU approval; and
  • all unsecured bondholders must be fully bailed-in before a bank is eligible to receive capital directly from the European Stability Mechanism.
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