Deutsche’s phase-out of old-style capital securities and the meaning of perpetual debt

On July 17, I posted on this blog about the difficulties that EU banks face when replacing pre-crises capital securities with Basel III compliant securities. Today the WSJ illustrates these difficulties for Deutsche Bank. This…

Solvency management by the denominators

One way a bank can manage its solvency is by changing the denominator of its solvency ratio, in this case of its BIS ratio. (The BIS ratio is the ratio of capital divided by Risk…

Leverage of U.S. Banks and Corporates, a graph.

There is lots of talk going on about bank leverage. But how does it look? The plot below shows solvency ratios for U.S. banks (red) and U.S. corporates (blue). It looks different. Note, these are…

EU conglomerate capital rules expose ING’s weak group capital

This week ING revealed its plans to spin off its Korean insurance unit, see this link from Bloomberg. This made me wonder how this bank-assurer would fare under the current capital rules for conglomerates. The…

Spot the differences: Tier 1 versus Equity for U.S. Bank Holding Companies

I embarked on a nice research result that may feed into the Basel discussion on the risk-based solvency framework (clik here for the DP). One would think that Tier 1 capital serves a solvency purpose,…