It spooked the markets for good reasons, but the leaked EC document on the merger of TLAC and MREL did not receive the attention that it deserves. Yes, Reuters reported on the leaked Information Note from the Commission Services for the European Commission Expert Group on Banking, Payments and Insurance. However I am not sure… Read More Is the European Commission phasing out MREL?
Today Finma, the Swiss bank supervisor posted its new Leverage Ratio requirement, see picture: Switzerland has decided to set a TLAC of 10% of total exposure for its global systemically important banks: 5% for going concern and 5% for gone concern, in line with the TLAC proposal of the FSB. Finma uses colourful language to… Read More The Swiss new capital requirements – why cheer?
Last week, the three European financial regulators warned financial institutions that they should tread carefully when it comes to marketing CoCos: capital securities that may convert or be written off when a bank gets into trouble. The warning may have been prompted by the failure of UK’s Co-operative bank or Dutch bank SNS. These failures bailed-in… Read More Caveat emptor? We should probably do more than tell banks how to sell CoCos.
Shortly after EBA, the BOE published its own stress test definition. From the announcement: “A key threshold for the UK variant test will be set at 4.5% of Risk Weighted Assets (RWAs), to be met with Common Equity Tier 1 (CET1) capital in the stress – using a CRD IV end-point definition of CET1 in line… Read More And BOE follows with details of UK stress test
Shortly after my posting, Deutsche announced it would not call its perpetual bond, reports Reuters. One rationale for not calling could be that the bond would still be useful as bailinable debt. An interesting trade-off has been made in favor of keeping old-style instruments over new, Bazel III-compliant, instruments. One could argue that a choice… Read More Update on Deutsche
I added the NZ Open Bank Resolution framework to my list of links, on the left. This in light of the CoCo discussion on my blog. For ease of use, see below: NZ Recovery and Resolution A primer on Open Bank Resolution Open Bank Resolution Open Bank Resolution (OBR) policy – Q&A EU Recovery and Resolution… Read More Some housekeeping on CoCo’s
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