Last week, the UK Prudential Regulation Authority (PRA) published a consultation paper on group policy and double leverage, in which the PRA wants to limit the risks arising from excessive double leverage. The consultation paper and the associated speech by Sam Woods received some coverage, though the ECM addendum on Non-Performing Loans probably attracted more… Read More Double leverage, a regulatory tribulation
The RBNZ wants to redefine capital. My comments are below. In short: don’t let perfection be the enemy of the good. The RBNZ runs the risk of achieving just what it does not want by going it alone. A DIY-definition of capital makes the Reserve Bank vulnerable to structuring. Moreover, the problems signalled by the Reserve… Read More Comments on RBNZ’s second capital review paper: What should qualify as bank capital?
About a fortnight ago Kiwibank announced that its formerly disqualified capital instruments now re-qualify as capital. Yay! This after a the capital disqualification event on which I wrote not so long ago. There was almost no press coverage of the re-qualification. Yes, there was NBR’s Jenny Ruth who wrote a noisy and non-informative story on the… Read More Kiwibank capital flip-flop
No surprise here: the RBNZ decided to render two cocos ineligible for regulatory capital purposes. This is what Kiwibank reported yesterday. The holders of the instruments likely will keep their coupon, at the expense of the cash flows accruing to Kiwibank. The reason for derecognising the instruments remains a bit of a puzzle: RBNZ “has… Read More RBNZ decides on Kiwibank cocos – uh oh
Kiwibank’s capital cock-up took an unexpected turn this week when the bank made another extraordinary announcement. On Friday, the bank let us know that its parents will bail out the bank with an infusion of $247 million of common equity. Sheesh, I thought only Italy did bail-outs! Infusing equity capital is the last thing a… Read More Kiwibank puts its money where its mouth should be
On 15 March, New Zealand Kiwibank issued two odd statements regarding their Basel III compliant (or is it compliant) capital instruments. The announcements raised the prospect of disqualification of two capital instruments: the Tier 2 convertible subordinated bond issued on 6 June 2014 (Tier 2 Bond); and the Additional Tier 1 perpetual bond issued on 27 May… Read More Free rider problems and tax bills? The Kiwibank capital cock-up