Bank bondholders to lose protection in future bailouts: M&G

Current protection for bank bondholders is likely to be abolished by regulators as part of reforms to the financial sector, M&G warns.

Bondholders, who lent banks billions of pounds in the run-up to the financial crisis, may have to accept steep cuts in the value of their holdings when a bank gets into trouble, with governments looking to avoid putting taxpayer money at risk. Tamara Burnell, the head of financial institutions in M&G's credit analysis team, says bondholders would share the pain of restructuring a bank alongside equity shareholders, who face a cut in the value of their stock holdings, The Guardian reports. Governments have previously sought to protect bondholders when institutions go bust, despite equi...