Insurers' fears over EU regs on bank bonds
Share
Life insurers have warned that European regulations forcing state-owned banks to cancel interest payments on bonds could be disastrous.
The European Union could demand that Government-rescued banks do not pay bondholders before taxpayers, according to The Telegraph.
Life insurers and pension funds say the rules could lead to a sharp fall in income if coupons are suspended on Lloyds Banking Group and Royal Bank of Scotland bonds.
Aviva says it has reduced payments to 76,000 investors by 20 per cent after Independent News & Media and Bradford & Bingley coupons were suspended.
The Association of British Insurers director of investment affairs Peter Montagnon says: “We need a very careful transition period so as not to disrupt the ability of insurers and others to match their long-term liabilities.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
