Australian banks fear statutory approach to TLAC

Bail-in rule for all senior debt could drive up funding costs significantly

australian-notes-domino
Domino effect: banks fear contagion risk from a move to subordinate existing debt

As Australia's banking regulator begins engaging with industry over plans for a new loss-absorbing regulatory framework, banks warn that any move to subordinate existing debt could introduce contagion risk across the entire capital structure.

Different jurisdictions have chosen to adopt different approaches to the new total loss-absorbing capacity (TLAC) framework, which was finalised by the Financial Stability Board (FSB) last November.

UK and US banks generally use holding companies to issue

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