• Industry: Financial Services, Banking
  • Type: Business and industry issue
  • Date: 12/07/2012

Bail-in liabilities: Replacing public subsidy with private insurance 

Post-financial crisis, regulatory reforms aim to make financial institutions safer and reduce damage from failing financial institutions. The first step to protect taxpayers when a financial institution goes into resolution is to write-down the capital instruments it issued. This may not be enough to meet all losses and does not address the challenge of sourcing new capital. Enter ‘bail-in’ - to write down or convert into equity a wider range of liabilities as part of a resolution.
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Bail-in liabilities are likely to constrain funding models, increase funding costs and pressure to raise secured funding. Firms – particularly systemically important banks – need to plan for bail-in liabilities alongside other key regulatory initiatives.


Our report details the bail-in resolution agenda, key regulatory viewpoints and implications for financial institutions. We have also developed a two-page briefing document which discusses the practical implications for financial firms and summarises the main arguments around the proposals.


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