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 wisdom of crowds

The idea that financial markets are efficient is fascinating. A compelling story about market efficiency is the one about the Space Shuttle Challenger disaster. The Challenger broke apart within minutes after its launch on 28 January 1986. I remember it very well. It was a cold day, I was in Groningen, the Netherlands. I cycled back home… Read More The wisdom of crowds

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?

That feeling when you notice that EU leverage ratio requirements are at risk

This week, the EBA and BCBS published the Basel III monitoring results. They show a further improvement of European banks’ capital positions, largely fulfilling the future regulatory capital requirements, with only a very small number of banks suffering from potential capital shortfalls. I found Figure 9 of the EBA report interesting. It shows the evolution… Read More That feeling when you notice that EU leverage ratio requirements are at risk

Five years after the first Basel III coco issuance, the Netherlands “gets” CoCos.

Uh oh, Jeroen Dijsselbloem form the Netherlands got into rough water this week: Dutch newspaper NRC had a nice scoop that showed how he relied on ING word smiths for writing a tax rule that renders bank capital instruments (CoCos) tax deductible, see full freedom of information documentation here. How bad is this? End 2013,… Read More Five years after the first Basel III coco issuance, the Netherlands “gets” CoCos.