Investors do not have to suffer losses before a bank is rescued, EU court rules
LUXEMBOURG — The EU’s top court ruled on Tuesday that junior creditors and investors need not necessarily suffer losses before a bank is rescued, a judgment that may work in Italy’s favour as it seeks to bail out its banks.The ruling, which follows action by disgruntled investors whose savings were wiped out by a bank rescue in Slovenia, is crucial in understanding how new EU rules to impose such losses are rolled out across the region.The so-called bail-in regime, adopted after the financial crash, forces losses on private investors before banks can be rescued by the state — in order to spare the taxpayer.While the judges in Luxembourg made clear that imposing such losses was legally sound, they appeared not to require that this happen automatically.This is important for Rome, which wants to rescue its banks while protecting investors, big and small, from any fallout.The final say, however, will be with the EU’s executive, the European Commission."The member state, and the banks wh...
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