An important step in this direction with regard to investments in banks was made at the beginning of this year, when the Bank Recovery and Resolution Directive, (BRRD) became effective. It helps to ensure that, in the future, the shareholders and creditors of a bank will be first in line to absorb any risks and losses.
And in this context it is important to note that because of the new Basel III regulation, banks are now obliged to maintain higher capital buffers. This helps to increase bank shareholders’ liability if the bank has to be restructured or even resolved.