New EU Bank-Creditor Loss Rules Leave Room for Confusion

The European Union has served notice that senior bondholders will be in the firing line for losses when banks go bust, yet the law’s fine print leaves room for confusion.

Policy makers from Michel Barnier to Jeroen Dijsselbloem have heralded legislation published yesterday as an iron-clad system for shifting the burden of bank failures from taxpayers to investors. In time of crisis, the directive’s exemptions and caveats will give regulators plenty of wiggle room.