A regulatory Catch-22: bail-in plans collide with Basel's NSFR

Basel’s liquidity rules mean banks will have to issue more long-term debt. That is not going to be easy if regulators also force senior bondholders to absorb a failing bank’s losses. By Mark Pengelly

Christian Weber

Europe's banks have to issue an estimated €2.7 trillion ($3.6 trillion) in long-term debt if they are to comply with Basel III’s incoming net stable funding ratio (NSFR). On its own, that would not be easy. But proposed rules on bank resolution could make the task far harder, by enabling regulators to impose losses on bondholders – a so-called bail-in regime that is expected to raise the cost of debt issuance by 100 basis points or more, while also shrinking the pool of investors able to hold

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here