Depositors should be the very last to suffer losses when a bank collapses, according to a proposal being discussed by European Union countries and seen by
Reuters, which would shield savers from the kind of losses they face in
Cyprus.
Reuters, which would shield savers from the kind of losses they face in
Cyprus.
The idea comes as member
countries finalize a new draft law for the European Union that could
make losses for larger savers a permanent feature of future banking
crises. EU officials, however, are nervous that such a regime will panic savers, prompting them to withdraw money.
In the paper, outlining the process of 'bailing in' savers and other steps to deal with troubled banks, officials in Brussels said that it might
be wise to put depositors behind all bondholders when dividing losses
from a bank collapse.
Small savers, with less than 100,000 euros, will, in any event, be protected. But
officials also raise the possibility of allowing national exemptions
from losses for big depositors in their country if a bank fails.
By striking such a compromise, officials hope to rebuild confidence after a botched attempt earlier this year to impose losses on depositors in
Cyprus - initially also aimed at small savers although this was later
changed.
http://www.reuters.com/article/2013/04/29/us-eu-banks-savers-idUSBRE93S0P120130429
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