shareholders more protected than bondholders – Corriere.it
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Bondholders, shareholders and the world upside down
Enforce the rights of bondholders only to the complete satisfaction of shareholders the world is upside down, if seen through the eyes of the European Central Bank. In Italy, as in the other countries of the Union, the rule is exactly the opposite. For the simple reason that buying stocks is rightly considered an investment in venture capital. A clear definition. An investment that can also be canceled, reduced to zero, when things go very badly. Or that it can reach very high heights otherwise. But in any case a different operation from lending money to a bank through a bond. The rescue of Credit Suisse calls into question a fundamental principle, affirmed during all the banking crises of the last decade, and in Italy we know something about it.
Shareholders are the first to absorb losses
The ECB writes in its statement: “In particular, common equity instruments are the first ones to absorb losses”, equity instruments are the first called upon to absorb losses. The strength of the large and very powerful Arab shareholders of the Swiss bank instead overturned, during the negotiations, the rules that exist in the Europe of the euro, supervised by the ECB. With all due respect to common sense, the principles of protection of bondholders and the value itself of the bonds of Swiss banks. Savers, but also investors, have agreed at their expense.
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