Should the marketing of subordinated debt be restricted/different in one way or the other? What to do in the case of mis-selling?

Martin R. Götz and Tobias Tröger ()
Authors registered in the RePEc Author Service: Martin Richard Goetz

No 35, SAFE White Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: An important prerequisite for the efficiency of bail-in as a regulatory tool is that debt holders are able to bear the cost of a bail-in. Examining European banks' subordinated debt we caution that households may be investors in bail-in able bonds. Since households do not fulfil the aforementioned prerequisite, we argue that European bank supervisors need to ensure that banks' bail-in bonds are held by sophisticated investors. Existing EU market regulation insufficiently addresses mis-selling of bail-in instruments.

Keywords: bail-in; BRRD; subordinated debt; EU market regulation (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-eec and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewh:35

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