Berlin to make debtholders carry greater burden

Dreaded_Estate

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FT.com / Capital Markets - Berlin to make debtholders carry greater burden

The Bundesrat, the German parliament’s upper house, is expected on Friday to pass radical bank restructuring laws that will include one of the first examples of a so-called “bail-in”, a scheme to ensure that creditors take losses when a bank is failing, rather than the state.

bail-inThe new rules would mean bondholders, even those ranked at the top of a bank’s capital structure, could be forced to swap some of their investment for equity and potentially suffer big losses to help rescue a bank before taxpayers are called upon.
Looks like Germany is serious about making bondholders be they bank sovereign take losses before the state or other states have to pay.
 


Watch The Break

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Does this apply to us though?

The Germans forcing the bondholders to take a haircut is our only real hope. They have the power to negotiate, we don't.

The question is can we get this done soon? Or are we going to have to struggle through two horrible years before they think we've suffered enough?
 

Squire Allworthy

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I disagree.
We are in a very strong negotiational position - we can't afford to pay !

+1

This is good news but needs to be taken forward Euro wide along with other measures of reform and regulation. Some QE may be needed.

The Irish situation needs to be unpicked and liabilities reduced to what is actually Ireland's responsibility. In many ways Ireland tried to do the right thing and play for the team and is getting slaughtered for it. That is wrong.
 


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