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27 Jun 2013
Flash: Eurogroup finance ministers to each an agreement? – ANZ
FXstreet.com (New York) - According to Economists Brian Martin and Amber Rabinov at ANZ, “Concerns over the ability of Eurogroup finance ministers to reach an agreement on a common framework for bank resolution has become the norm.”
Indeed, the market had been guided to believe that future bank bailouts, should they arise, would be addressed through bail-ins of equity and subordinated debt holders. Depositors, insured or uninsured, and senior debt holders would be left unscathed. Eurogroup finance ministers failed to reach agreement on this last weekend, but negotiations are continuing. There was some disagreement over whether or not non-national uninsured depositors should be bailed-in.
“It is imperative for the success of banking union that a clear and common trans-national resolution framework is achieved. It is not the case that there are going to be enormous cash calls to recapitalize banks in the euro area –that has already been done.” EUR 500bn has already been allocated to emergency support program in peripheral economies, the majority of which has been aimed at recapitalizing distressed banking systems.
Indeed, the market had been guided to believe that future bank bailouts, should they arise, would be addressed through bail-ins of equity and subordinated debt holders. Depositors, insured or uninsured, and senior debt holders would be left unscathed. Eurogroup finance ministers failed to reach agreement on this last weekend, but negotiations are continuing. There was some disagreement over whether or not non-national uninsured depositors should be bailed-in.
“It is imperative for the success of banking union that a clear and common trans-national resolution framework is achieved. It is not the case that there are going to be enormous cash calls to recapitalize banks in the euro area –that has already been done.” EUR 500bn has already been allocated to emergency support program in peripheral economies, the majority of which has been aimed at recapitalizing distressed banking systems.