Grandfathering, the composition of tier one capital and loss absorption are the most worrying aspects of the Basel Committee’s latest proposals, says Linklaters’ head of equity and debt markets group, Carson Welsh.
“In the short term, ambiguity surrounding grandfathering is one of the biggest concerns for banks,” said Welsh. The Basel proposals state that grandfathering will be considered in relation to existing hybrids instruments that were sold before the proposal was published (December 17 2009).
But no mention is made of the position for instruments issued after that. This has caused confusion. While...