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Thursday, 19 October 2017

Rabobank unveils chunky bail-in buffer

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  • The logo of Rabobank is seen on the building of its headquarters in Utrecht

Rabobank unveiled a €54.5bn bail-in buffer in its first half investor presentation on Thursday as it sought to reassure bondholders of the strength of its balance sheet.

The Dutch bank said that while the exact definitions of MREL and TLAC were still being debated and more clarity was expected only later this year, it had built a buffer of 25% of RWAs.

It said that would act as strong protection against bail-in of senior unsecured debt, which would not be affected until losses exceeded that €54.5bn amount, or 8.1% of the balance sheet.

“Even if losses were to amount to 10% of balance sheet total (€67bn), losses for senior debt would be limited to 9%, the bank added.

The news comes against a backdrop of changing rhetoric for senior bank debt. Holders of senior Greek bank debt could face heavy losses after authorities made bail-in of senior debt one of the conditions of Greece’s third bail-out.

Rabobank’s bail-in buffer has grown €3bn from December last year, according to the presentation.  The cooperative also made its voice heard on various regulatory proposals that are currently being looked at.

The bank said it did not support German proposals that would potentially subordinate senior bonds to all other senior liabilities.

“Rabobank is in favour of building up high capital buffers to protect senior unsecured liabilities. Additionally, Rabobank supports the comprehensive approach whereby on a statutory basis losses can be spread over as many senior liabilities as possible,” it said.   

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