EU executive says national authorities should get powers to write down senior debt at ailing banks – Draft paper

Won’t be helping euro.

All bondholders should be forced to take losses in an ailing bank under draft European Union proposals aimed at avoiding taxpayers again having to fund bailouts in the next crisis.

EU executive commission to publish consultation paper as soon as this week, to shape its crisis management legislative proposals later in year.

The paper obtained by Reuters says writing down a bank’s stock and subordinated debt may not be enough at times, and that national resolution authorities will need “additional writeoff” powers.

EU executive proposes a tiered model beginning with writedowns of equity and and subordinated debt with senior debt next in line.

Draft paper says “Building on the minimum powers above, the first ‘comprehensive’ approach aims to make a broad range of senior creditors face the real risk associated with bank failure.”