Covered bonds excluded from bail-in but not immune

EU leaders finally reached an agreement on bail-in rules on Thursday, laying the ground for a pan-European framework for forcing losses on to the shareholders and creditors of failed or failing banks. However, the accord gives national regulators wide discretion over how to apply these losses, making it difficult to judge the risks of investing in senior unsecured bank paper. Though covered bonds are excluded from bail-in they are not immune.