First the shareholders should “pay” the losses of the banks that are in crisis and then the bondholders, the supervisory authorities of the European banks emphasize in their joint statement, stressing that the European banking sector is resilient.

The announcement comes after the decision of the Swiss authorities to zero the value of additional tier 1 bonds of Credit Suisse, with a nominal value of 17 billion dollars.

The ECB’s Banking Supervision, the Single Resolution Board (SRB) and the European Banking Authority (EBA), after welcoming in their statement the measures taken yesterday by the Swiss Authorities, stress that “the European banking sector is resilient with strong levels of capital and liquidity”.

“The resolution framework applied in the European Union, which has been proposed by the Financial Stability Board after the global financial crisis, has established, among other things, the order in which the shareholders and creditors (bondholders) of a troubled bank take losses” , it is noted in the announcement of the European Authorities.

In particular, it is noted that the shares are the first to absorb losses “and only after their full use would it be required to “cut” the bonds.

“This approach has been applied consistently in the past and will continue to guide the actions of the SRB and the ECB’s banking supervision in crisis interventions,” he adds, while stressing that “Additional Tier 1s are and will remain an important part of the capital structure of European banks”.