The European Central Bank would no longer oppose the forcing oflosses on senior bondholders of euro-area banks, said two officialswith knowledge of the ECB's thinking.

A key condition to imposing losses is if the bank in question isbeing wound down, one of the officials said. The ECB supportedimposing losses on senior bondholders of ailing Spanish banks at ameeting of euro-area finance ministers in Brussels on July 9,though the proposal didn't get much traction, the other officialsaid. Both of them spoke on condition of anonymity as the talks areconfidential.

The Wall Street Journal today reported the ECB's change ofposition, after the Frankfurt-based ECB consistently opposedhanding losses to senior creditors of Irish banks following thecollapse of the country's financial sector. An ECB spokesmandeclined to comment on the WSJ report.

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