Principles & Operation of bail-in execution

The “Bail-in-tool” is a key resolution instrument in order to recapitalize a failing bank of public interest. In contrast to a bail-out, bail-in procedures place the burden of loss absorption and recapitalization on owners and certain creditors of the bank, not on the taxpayer. When applying the tool, the FMA (in its role as resolution authority) may write down liabilities of the institution or convert them into ordinary shares. Both measures are aimed to stabilize the bank and prepare it for resolution, e.g. selling the entity to a new investor.

The following guidance provides an overview of the principles and steps involved in executing the bail-in process: