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EU bank watchdog says lenders might face capital gaps after Brexit

Published 05/04/2018, 10:18
Updated 05/04/2018, 10:18
© Reuters. FILE PHOTO: Flags are arranged at the EU Commission headquarters ahead of a first full round of talks on Brexit, Britain's divorce terms from the European Union, in Brussels

© Reuters. FILE PHOTO: Flags are arranged at the EU Commission headquarters ahead of a first full round of talks on Brexit, Britain's divorce terms from the European Union, in Brussels

BRUSSELS (Reuters) - Banks in the euro zone have about 100 billion euros (£87.3 billion) of bonds issued under British law that they might not be able to use as buffers to absorb losses after Brexit, the bloc's banking watchdog said on Thursday.

If no agreement is found between Britain and the EU on mutual acceptance of these outstanding bonds to absorb losses, euro zone banks will have to issue new bonds to cover likely capital gaps.

© Reuters. FILE PHOTO: Flags are arranged at the EU Commission headquarters ahead of a first full round of talks on Brexit, Britain's divorce terms from the European Union, in Brussels

The watchdog, the Single Resolution Board, said the outstanding bonds have been issued by banks from several euro zone countries, including Italy, Germany, France and Finland.

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