Contingent Capital in European Union Bank Restructuring

The uncoordinated reorganization and resolution of Systemically Important Financial Institutions in different countries pose many challenges. Contingent capital provides a viable alternative for the efficient restructuring and resolution of failing financial institutions. Contingent Capital provides a mechanism for internalizing banks’ failure costs and helps return distressed financial institutions to solvency. This article offers a comparative perspective on bank resolution and restructuring in the European Union, Switzerland, the United Kingdom and Germany and shows that Contingent Capital could play a substantial role in bank restructuring.