ECB Declines Comment On Bank Bond Losses Report

The European Central Bank declined to comment on Monday on a report its president advocated imposing losses on holders of senior bonds issued by the most severely damaged Spanish savings banks in what would be a change to the ECB’s previous stance.

The Wall Street Journal said ECB President Mario Draghi presented the new stance – which contrasts with a position it took in 2010 that senior bondholders in bailed-out Irish banks should not suffer losses – on Monday last week at a meeting of euro zone finance officials.

Finance ministers rejected the advice out of concern that financial markets would react badly to such a decision, the paper said.

An ECB spokesman declined to comment on the discussion at the Eurogroup meeting of euro zone finance officials, adding that the issue was one for governments to decide.

“The ECB provides advice whenever requested,” the spokesman added. “The ECB’s advice aims to ensure that the treatment of senior bond holders is in line with EU rules.”

Reuters