On 5 December 2019 at 12:01pm, 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 for… Read More The curious share price movements of four big Oz banks on 5 December 2019
My post on EU leverage ratios yesterday attracted some comments on twitter, which may haven been triggered by misunderstandings. The CRR offers a short and clear summary of the Leverage Ratio definition in Article 429.1: “The leverage ratio shall be calculated as an institution’s capital measure divided by that institution’s total exposure measure and shall… Read More FYI some documentation on the Leverage Ratio for EU banks
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.
Frances Coppola this week posted on her blog an explanation of Capital, liquidity and the countercyclical buffer, in plain English. Frances posted because of Caroline Binham’s use of language in a Financial Times article. Caroline, according to Frances, is wrong. So wrong even that she takes it out on Caroline, blaming her for not being… Read More The language of Capital and Equity
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
With the EBA and the ECB announcing results of the stress test and the AQR next week, and with feeble banks shivering, you may consider setting aside a couple of hours this week to read the terms and conditions of bank capital instruments. Maybe your investment in capital securities of EU banks is at risk, maybe not.… Read More Homework for the upcoming week: EU bank capital rules.
BPCE (A2/A/A) announced a benchmark USD RegS/144A dated Tier 2 transaction with IPTs of UST+230bps area. HSBC Bank Plc (Aa3/AA-/AA-) is expected to issue its inaugural multi-currency AT1 transaction this week following a global investor roadshow. Credit Agricole (A2/A/A) is holding investor meetings in the US and Europe starting from 8 September for a possible… Read More The market for hybrids is open for business!
Under my pen-name “Martien Lubberink”, I wrote on CoCos, offering this part of the world a solution for mis selling them. I think my solution is superior than the ban of the FCA. See Let them eat CoCos?
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.
Cetier is happy today, knowing that the three EU financial market regulators read his post on Convertible Capital (CoCo hurdles). They read it many times and concluded he was right. Or maybe they read the post on Matt Kimball’s site, or the post on Pieria. Whichever post they read, they all originated from my keyboard,… Read More Told you so! EU regulators warn against selling coco’s to retail investors.