"With the creditor hierarchy legislation agreed upon today, every investor will know that they - not the taxpayers - will have to pay when a bank has problems", said EP Rapporteur Gunnar Hökmark MEP.
The agreement with the Council on the Directive on the ranking of unsecured debt instruments in insolvency proceedings (bank creditor hierarchy) was adopted with a broad majority by the European Parliament. "This legislation will improve the resilience of European banks and bring our legislation into line with new prudential international standards. It is one of the building blocks in making a well-functioning financial market and Capital Markets Union a reality", said Hökmark.
The creditor hierarchy agreement is part of a legislative package aimed at reducing risks in the EU banking industry. It establishes an EU harmonised approach to the priority ranking of bank bond holders in insolvency and in resolution. It also clarifies that shareholders and investors must themselves take on losses. They can no longer expect governments to bail them out. "For depositors and investors, this new legislation provides legal clarity and certainty which also gives security", concluded Gunnar Hökmark MEP.