In March 2009, the International Accounting Standards Board started an ambitious plan to make accounting for banks easier to understand. In no less than 97 pages, the IABS laid out its plan to reduce complexity in the reporting of financial instruments.* At the time, the IASB did the right thing. The standard in force was too complex.… Read More No battle plan survives first contact with the enemy
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
It ain’t over till it’s over: the Basel Committee on Banking Supervision churns out new regulatory initiatives like there’s no tomorrow. Last week, the Committee issued a consultation on TLAC. The good thing is that the BCBS does consult. And the Basel TLAC consultation deserves support: it proposes to deduct TLAC holdings from regulatory capital.… Read More Basel Committee Consults on TLAC
This week, the FSB announced its TLAC term sheet. The FSB did not really water down the original proposal, except for the concession that helps European banks with subsidiaries abroad – but that was announced some months ago. So, no comments from me. See the FSB TLAC page here.
This week, the EBA held a public hearing on the 4 May report on AT1 issuances, see my previous posts on this. Click here for the PowerPoint that the EBA prepared. Apparently no surprises. On the hot topic of Contingent Clauses, the EBA reports that it “confirms its previous reserves, and recommends disallowing contingent clauses”.… Read More UPDATE 2: The EBA’s laudable effort to tame Additional Tier 1 issuances
Today, the EBA held a public hearing on the 4 May report on AT1 issuances, see my previous post on this. Click here for the PowerPoint that the EBA prepared. Apparently no surprises. On the hot topic of Contingent Clauses, the EBA reports that it “confirms its previous reserves, and recommends disallowing contingent clauses”. A… Read More UPDATE: The EBA’s laudable effort to tame Additional Tier 1 issuances
A Dutch public radio station asked me to comment on Contingent Convertible capital (in Dutch). My comments were in line with previous posts on CoCos: they tend to end in tears. Thanks Stefan Heijdendael, the main investigator and reporter, for explaining CoCos very well. On TLAC: Also thanks for anticipating on TLAC rules from the… Read More Jay! A public radio station in the Netherlands gave me some air-time to discuss CoCos
Last November, the Financial Stability Board (FSB) presented its consultation document on Total Loss Absorbency Capacity (TLAC). The document is a response to the request of G20 leaders to enhance the loss-absorbing capacity of global systemically important banks (G-SIBs) in resolution. It presents a term-sheet with requirements for TLAC. The document looks heavy-handed because of… Read More Good, bad, and ugly questions about TLAC
The Financial Stability Board presented this consultation paper on Total Loss-Absorbing Capacity (TLAC) for global systemic banks. The agreement is “a watershed in ending ‘too-big-to-fail’ for banks,” said Mark Carney, the governor of the Bank of England and chair of the FSB. If the G20 agrees, then TLAC will be the new name of the game.… Read More TLAC is the new name of the game.