9 October 2015
The German Parliament (Bundestag) has resolved on a revised law implementing the Single Resolution Mechanism. As reported (see our Newsletters of May 2015 and of March 2015), the former drafts included a proposal on the subordination of senior unsecured bonds in bank insolvency. Now, under the Act, senior unsecured debt instruments are not automatically subordinated by law but are treated separately when distributing the assets to the creditors of the estate. The Act now also contains a clarification on the treatment of repo or securities lending transactions covered by master agreements under the bail-in tool as implemented by the German Recovery and Resolution Act (Sanierungs- und Abwicklungsgesetz, "SAG").