Insurance EuropeInsurance Europe
Position Paper
Key messages on proposed Directive to establish a framework for the recovery and resolution of credit institutions

Insurers recognise the importance of breaking the link between banks and their sovereigns. However, from an investor perspective, it is important that the proposed bank resolution tools strike a balance between ensuring an appropriate framework for managing resolution and recovery actions and maintaining sufficient incentives to invest in the banking sector.

Specifically, the establishment of a bail-in regime could have a significant impact on investment decisions and, as a consequence, have implications for the banking sector’s ability to successfully fund itself. An improperly calibrated bail-in mechanism could not only lead to an increase in the cost of banks’ debt funding but could also restrict banks’ access to long-term financing.

Published 16 November 2012
Cristina Mihai
Cristina Mihai
Head of prudential regulation & international affairs