The curious share price movements of four big Oz banks on 5 December 2019

On 5 December 2019 at 12:01 pm, I received an email from the Reserve Bank of New Zealand. The email announced some important decisions about the Bank’s capital review. As the email contained summary information only, I went to the RBNZ website to get the documents explaining the capital review decisions. Unfortunately, it was impossible… Read More The curious share price movements of four big Oz banks on 5 December 2019

My two cents on Ross Levine’s expert report: deep thinking on incentives, dynamics, and moral hazard.

Last week, the RBNZ released the three independent international experts’ assessments of the New Zealand Capital Review. The RBNZ commissioned three international experts in May as part of the bank capital review. The reports by Cummings, Miles and Levine offer interesting views on bank capital. The reports are different in substance and style. However, they… Read More My two cents on Ross Levine’s expert report: deep thinking on incentives, dynamics, and moral hazard.

The international financial institution that the RBNZ ignored

Yesterday, the RBNZ announced the release of submissions on the last capital review paper. A whopping 161 submitters shared their views on the Reserve Bank’s capital proposals. This is significant for sure. It also confirms how interesting bank capital regulation is! I quickly found my own contributions. Three this time, but I wonder why the… Read More The international financial institution that the RBNZ ignored

European Commission slaps Dutch government on the wrist: the end of AT1 coupon tax deductibility?

Just the other day, the Dutch government announced plans to end the favorable tax treatment of CoCo securities. From 1 January 2019 onward, the tax deductibility of the coupon paid on Additional Tier 1 capital instruments will end. [1] See a Google translation of the announcement here. Such a change in tax treatment likely constitutes a Tax… Read More European Commission slaps Dutch government on the wrist: the end of AT1 coupon tax deductibility?

The European Commission’s proposal to accelerate the reduction of non-performing loans

This week the EC presented concrete steps to tackle non-performing loans, see this page. Ouch One and Ouch Two Two reasons why this is an interesting proposal. First, it forces banks to deduct any provisioning shortfalls directly from Common Equity Tier 1. Ouch! Second, the proposal amends the CRR, which is a Regulation. And we… Read More The European Commission’s proposal to accelerate the reduction of non-performing loans

Double leverage, a regulatory tribulation

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