Spanish savers to lose billions under new bailout deal

European authorities are pushing Spanish banks to write off their preferred shares and subordinated bonds, in a move which could see small savers lose billions of euros.

In a draft memo seen by the FT, European authorities are proposing banks and their shareholders take losses before they are recapitalised by eurozone rescue funds. "Banks and their shareholders will take losses before state aid measures are granted and ensure loss absorption of equity and hybrid capital instruments to the full extent possible," the document says. Spanish banks have €67bn of subordinated and hybrid debt outstanding, according to Bank of Spain, much of which was sold to retail investors as savings products in the form of savings bonds. Luis de Guindos, Spain's financ...