Anatomy of a Bail-In

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Title: Anatomy of a Bail-In
Authors: Conlon, Thomas
Cotter, John
Permanent link: http://hdl.handle.net/10197/5614
Date: 4-Mar-2014
Abstract: To mitigate potential contagion from future banking crises, the European Commission recently proposed a framework which would provide for the bail-in of bank creditors in the event of failure. In this study, we examine this framework retrospectively in the context of failed European banks during the global financial crisis. Empirical findings suggest that equity and subordinated bond holders would have been the main losers from the e535 billion impairment losses realized by failed European banks. Losses attributed to senior debt holders would, on aggregate, have been proportionally small, while no losses would have been imposed on depositors. Cross-country analysis, incorporating stress-tests, reveals a divergence of outcomes with subordinated debt holders wiped out in a number of countries, while senior debt holders of Greek, Austrian and Irish banks would have required bail-in.
Type of material: Working Paper
Publisher: University College Dublin. Geary Institute
Series/Report no.: UCD Geary Institute Discussion Paper Series; WP2014/05
Keywords: Bank resolutionBail-InEuropean bank failureGlobal financial crisisImpairment charges
Other versions: http://ideas.repec.org/p/ucd/wpaper/201405.html
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Geary Institute Working Papers

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