BaFin Signals Tough Stance on Banks’ Bail-In Bonds Despite Costs

Germany’s top official for winding down failing banks said lenders must keep selling bonds that can absorb losses, despite the fact that higher rising interest rates makes issuing the securities costlier.

Lenders built up buffers of such debt, which forces more of their investors to share the burden in case of a failure, in the years following the financial crisis, when interest rates were at record lows.

While higher rates make it more expensive to replace maturing notes, banks will still need to meet a minimum requirement for securities such as AT1 bonds and subordinated debt, said Birgit Rodolphe ...