Bail-in plans could undermine Basel's NSFR

Basel III rules that require banks to issue an estimated €2.7 trillion in long-term debt could be thwarted by plans to make investors accept losses


Plans to make senior bondholders absorb bank losses – a so-called 'bail-in' regime – could make it harder for the industry to meet Basel III's net stable funding ratio (NSFR), investors and analysts are warning. To comply with the NSFR, Europe's banks would have to sell an additional €2.7 trillion in long-term debt, according to one estimate – but strategists at JP Morgan forecast that investors could demand as much as 345 basis points of additional spread to accept bail-in risk.

“To comply with

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