Before bail-in capital became officially endorsed by regulators, depositors in Iceland and Cyprus suffered losses on deposits when their respective banking systems collapsed. We examine what happened in these scenarios, and the first official ‘bail-in’ with Banco Popular, along with the lessons learned by regulators, savers and the markets.
Key learning objectives:
Why were British savers at risk from investing with Icelandic banks?
What losses did Cyprus impose on depositors and why?
What real-world implications may we glean from the ‘bail-in’ of Spain’s Banco Popular?