The seventh edition of the Austrian Financial Market Authority’s new series Let’s talk about supervision (Reden wir über Aufsicht) addresses an issue in relation to bank resolution. Bail-in, i.e. the write-down or conversion of liabilities for loss absorption and recapitalisation purposes, is a central instrument in the resolution of banks. However, implementation of the bail-in may be associated with significant economic and operative challenges. Where it becomes particularly problematic, is where retail depositors are affected by a bail-in, as has been impressively apparent in previous resolutions. The proportion of retail depositors in Austria holding bail-inable debt securities is still significantly higher than the European average.
Further information on bank resolution can be found on the FMA website here.
A new information series for supervised entities
Let’s talk about supervision – is the FMA’s new regular information series for supervised entities. This format is intended for covering new areas of supervision as well as thematic areas where a need for explanation has been detected in the market. Relevant thematically-specific information is intended to be communicated in a quick and easy to understand manner, to create greater clarity as well as contributing towards ensuring that supervisory standards are observed. All editions published to date may be found here (in German only).