The threat of a bail-in as a measure to recapitalize EU banks has a very strong preventive effect by pressuring banks to raise private capital, as was the case in Greece, Dutch finance minister and Eurogroup President Jeroen Dijsselbloem said on Wednesday, in a speech at a UBS event in London.
“The threat of bail-in has caused banks to increase their buffers by raising private capital, issuing shares or merging with other banks. In Greece, for example, the threat of bail-in late last year significantly increased private participation in the recapitalisation process of some Greek banks, thereby reducing the public burden,” he said.
“The same can now be seen in Italy. Private solutions are once again preferred,” he added.