European Banking Authority warns on banks

It may be hard for markets to absorb debt worth up to €276bn that banks in the EU must issue to comply with rules aimed at shielding taxpayers from bailouts, the bloc’s banking watchdog said.

The European Banking Authority (EBA) says regulators will have to give some lenders enough time, given the strain on markets from raising such amounts of debt.

The debt is known as MREL and can be written down or ‘bailed in’ to replenish burnt-through capital if the lender collapses, thus avoiding governments having to pick up the tab as they did during the 2007-09 financial crisis.