Novo Banco’s selective bail-in a test to the EU’s new resolution regime

b34ac93a-e64b-4881-9c68-a7f053f0d039.imgBank of Portugal’s selective transfer of bonds from Novo Banco back to Banco Espírito Santo is the first test to the “no creditor worse off” rule under EU’s new bank recovery and resolution regime. It remains to be seen whether this measure was a one-off now that the Single Resolution Board has taken over from national resolution authorities.

“Portugal’s central bank has offered to partly compensate Novo Banco bondholders who lost money when their securities were transferred to a “bad bank” last month in a bid to ease tensions with the government and furious international investors.”

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