Why I am still underweight banks

OMAM BOND BLOG

The Irish round of the sovereign debt crisis clarified one thing - taxpayers are not going to continue to dole out hundreds of billions in hard currency to prop up otherwise insolvent banks.

Politicians facing rioting voters have discovered a thing called senior debt - and invented a phrase for how they mean to get their hands on it: ‘bail in'. In December the latest slug of banking regulation, known familiarly as Basel III, was delivered. But while investors have been distracted by the impact of the new rules for individual securities, something else is happening that is far more profound and more destructive to bondholder rights. On 5 January this year, the EU published a consultation paper on a Framework for Bank Recovery and Resolution. It is based on a recent German ...