EU agrees banks' bail-in deal. Banks on verge of collapse will have to tap shareholders before

[pampango]

falling back on state-funded rescues in the future.

Banks on the verge of collapse will be forced to tap their shareholders, bondholders and biggest customers for cash before falling back on taxpayer bailouts under an agreement hammered out by European Union members.

The agreement reached in Brussels is intended to shield taxpayers from another round of crippling bank bailouts of the kind that took place in 2008 and also avoid a re-run of the eurozone crisis where troubled banks and heavily indebted governments have become inextricably linked.

Under the regime being created, a clear pecking order for collapsing banks is set out: shareholders are first; certain types of bondholders; and then customers who have deposits over the guaranteed level of €100,000 (£85,000). These three types of creditors would need to take minimum losses of 8% of a troubled bank's total liabilities.

But there are concerns about how bond holders will react to having to take losses, Neil Williamson, head of EMEA credit research at Aberdeen Asset Management, said that while bondholders in banks should not expect taxpayer support, in the midst of a crisis it could be difficult to enact the proposals.

http://www.guardian.co.uk/business/2013/jun/27/eu-agrees-banks-bail-in-deal

[upaloopa]

1. well all those folks made money while causing the colapse

they shouldn't expect the rest of the population to pony up when they had no roll to play

[octoberlib]

2. And our Congressmen , at the behest of bank lobbyists,

weakened Dodd- Frank to the point of uselessness. When our economy collapses again,it'll fall right back on the taxpayer. I predict massive social unrest.

[kelliekat44]

3. Don't tell me that somewhere investors will be hurt??? No one is supposed to have to deal with RISK

It's ok if regular consumers take a hit but no, no, please don't hurt the banksters or the investors.