Eurozone banks, facing the prospect of having to completely restructure their businesses to comply with new rules designed to solve too-big-to-fail problems, are gearing up for a fight with regulators. Plans laid out last Monday by the Financial Stability Board that will require globally systemically important banks (G-SIBS) to have a layer of total loss absorbing capital (TLAC) sparked fury among bankers at eurozone institutions. This is because the current proposals mean that TLAC instruments have to be junior to most of a banks' liabilities, leaving those banks that do not have a ready-made place (such as a holding company) to house the instruments at a severe disadvantage. This is the case for most eurozone banks, as unlike their UK, US and Swiss counterparts, their corporate structures do not involve holding companies.
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