The European Banking Authority has published two consultation papers on:

• guidelines on the treatment of shareholders when applying the bail-in tool or the write down or conversion of capital instruments; and
• guidelines on when and how different conversion rates from debt to equity should be set for different types of liability.

Both sets of draft guidelines are part of a series of EBA regulatory mandates under the Bank Recovery and Resolution Directive which aim to ensure that the bail-in power is an effective way of absorbing losses and recapitalising banks in resolution, and that resolution authorities and other stakeholders have a clear understanding of the terms on which it should be applied. Together with the draft guidelines on treatment of liabilities in bail-in, and the draft technical standards on valuation in resolution, they aim to clarify how valuation information should inform the determination of the terms of bail-in.

The deadline for comments on both consultation papers is 6 February 2015.

View EBA consults on guidelines on the use of the bail-in power, 11 November 2014