In the event that an FI is resolved, creditors who receive less than they would if the FI had been liquidated, would be able to claim the difference from a resolution fund. The fund will be funded by the financial industry, MAS added in its statement.
The Monetary Authority of Singapore (MAS), on March 22, announced that it intends to stick to the hierarchy of claims in liquidation should it need to exercise its powers to resolve a financial institution (FI). This means that equity holders will absorb losses before holders of Additional Tier 1 (AT1) and Tier 2 capital instruments.
The central bank’s statement comes after the Swiss Financial Market Authority (FINMA) determined that Credit Suisse’s AT1 capital of 16 billion Swiss francs ($23.12 billion) will be written off to zero on March 19.
