European Commission says depositor bail-in a ‘possibility’ in other eurozone countries

The European Commission appeared on Tuesday to back Eurogroup chief Jeroen Dijsellbloem’s comment that large depositors could be bailed-in for future bank rescues.

“In the Commission’s proposal, which is under discussion, it is not excluded that deposits over 100,000 euros could be instruments eligible for bail-in,» Chantal Hughes a spokesperson for European Internal Markets and Services Commissioner Michel Barnier told a press briefing in Brussels.

“It is a possibility.”

Earlier, European Central Bank executive board member Benoit Coeure said Dijsellbloem was wrong to say that depositor bail-ins could be used in the future.

“Dijsselbloem was wrong to say what he said,” Coeure said on Europe 1 radio.

“The experience of Cyprus isn’t a model for the rest of the euro zone because the situation there reached a level that doesn’t exist elsewhere,” Coeure said. “All countries have different problems — economic problems, problems of unemployment — but no country has the same concentration of problems as Cyprus.”

The Eurogroup issued a statement on Monday night denying that its chief, Dutch Finance Minister Dijsellbloem, had suggested that depositor bail-ins would be used for bailout programs as in the case of Cyprus.

“Cyprus is a specific case with exceptional challenges which required the bail-in measures we have agreed upon yesterday,” the Eurogroup said in a statement.

“Macro-economic adjustment programs are tailor-made to the situation of the country concerned and no models or templates are used.”

Earlier, Dijsellbloem had suggested that bank shareholders, bondholders and depositors could be asked to contribute to the recapitalization of lenders instead of the banks being lent money as part of bailout programs.

“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders,” he said in an interview with Reuters and the Financial Times.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.