UK narrows carve-out for swap bail-in clauses

Non-EU derivatives contracts will have to be amended, say lawyers

storm clouds over city of london
The London-based Prudential Regulation Authority published a new consultation paper on March 15

UK regulators have quashed banks' hopes of a carve-out from a requirement to insert bail-in clauses into thousands of derivatives contracts.

The European Union's Bank Recovery and Resolution Directive (BRRD) requires all out-of-the-money liabilities, including derivatives, to be subject to bail-in, even if they are not governed by EU law.

UK regulators granted a broad exemption last year allowing banks to avoid repapering thousands of bilateral derivatives contracts to include a bail-in clause

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