REGULATORY CAPITAL: A DEFINITIVE GUIDE TO THE LATEST DEVELOPMENTS

Author: IFLR Correspondent | Published: 27 Aug 2013
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IFLR’s coverage of regulatory changes to US, EU and Asia-Pacific bank capital structures features in-depth analysis and expert opinion on the global implementation of Basel III, as well as the latest structural innovations across the capital spectrum


Europe’s bank capital regime:
EU regulatory capital: a guide to structuring new deals
Despite a predicted influx of new-style European bank capital issuances within the next five years, the structure of instruments across the capital spectrum remains largely idiosyncratic. Here's how and where consistency will be achieved

Can Europe covered bonds count as tier 1 capital?
The final CRD IV draft seems to make a specific carve-out for Danish covered bonds. But can other juridictions adapt their markets to qualify as tier 1 capital?

Tier 2: a new lease on life
Under CRDIV, banks must also hold a 2% buffer of subordinated debt, or tier 2 capital. Such instruments must incorporate non-deferrable coupons and have a maturity of at least five years. Step-up coupons are also discouraged

Tier 2 issuances set to confuse investors
There was renewed buzz around CoCos last year, off the back of impressive issuances by UBS and Barclays. Lawyers expect greater diversification of Tier 2 capital instruments in 2013

Contingent convertible capital

CoCos: investor preferences assessed
With contingent convertibles set to be a key capital instrument of the future, it’s crucial for investors to understand what to focus on when assessing different features

CoCos structure to adapt to better suit investors
A flood of new CoCo issuances are expected to meet UK banks' £25 billion funding shortfall, as market participants believe equity markets are not deep enough to support this funding alone

How Cyprus impacts CoCo investment
Cyprus’s bailout offers a reality check on the bail-in risks attached to contingent convertible bonds. But some banks are hailing a riskier form of CoCo as the funding tool of the future

A definitive guide to CoCos
With many hailing contingent convertible securities as the capital instrument of the future, analysing past deals to understand how the market will develop is a key step for would-be issuers and investors alike

Barclays’ bold CoCo
The British bank’s contingent capital offering proved a hit with investors. But its competitors are a little more wary

Asia-Pacific’s bank capital regimes:

Asia bank capital series: Singapore Basel III implementation explained
Singapore is proving a trailblazer for Basel III implementation, with the country’s banks already looking at innovative capital raising instruments

Asia bank capital series: Philippines’ Basel III implementation explained
The Philippines requires compliance with its latest capital rules by January 1 2014. The country’s banks are already looking to Basel III-compliant instruments

Asia bank capital series: what to expect from first Basel III-compliant offerings
Banks in most Asian jurisdictions are rumoured to be planning Basel III-compliant offerings. Here's how lawyers in the region expect the market to develop

Asia bank capital series: Indian Basel III implementation explained
While the regulatory regimes for Basel III capital requirements differ slightly across Asian jurisdictions, the Reserve Bank of India's approach is considered especially quirky

Asia bank capital series: Malaysia, Thailand Basel III-compliant bonds explained
In part one of this Asia bank capital series, IFLR assesses the implementation of Basel III and the development of local bank capital regimes in key jurisdictions throughout Asia

Australia's first Basel III-compliant Tier 2 hybrid explained
Suncorp's hybrid issue marks the first Basel III Tier 2 hybrid in the Australian market. But it is unclear whether copycat deals will follow

Thai amortizing bond reveals post-Basel III plans
To encourage debt capital markets innovation in Thailand, its Ministry of Finance issued a THB30 billion 25-year amortising bond in December. Here’s why it matters

Americas’ bank capital regimes:

US banks’ regulatory capital question continues
Morrison & Foerster's Anna Pinedo explains why there is still a lack of consensus in the US regarding how to approach regulatory capital and prudential regulation

Considerations when issuing CoCos into the US
Jeffrey Oakes and Connie Milonakis of Davis Polk & Wardwell outline the key features and disclosure considerations for European banks issuing into the US

BASEL III IMPLEMENTATION

Global concerns:
Global regulators to copy UK's relaxed capital rules
Other countries are tipped to follow the UK Financial Services Authority's lead and soften bank capital requirements ahead of Basel III implementation

OPINION: The year is 2010. Basel 6: how did we get here?
The International Centre for Financial Regulation's chief economist has predicted Basel III will look very different in just a few years time

Asia-Pacific concerns:
Why Basel III could jumpstart Asia's high-yield market
As bank lending becomes less accessible, the region's high-yield market could thrive. But Asian investors must first become more open to investing in low-rated notes

Apra’s approach to Basel III liquidity rules explained
Following the Basel Committee's guidance for meeting the LCR, Australia's Prudential Regulatory Authority has adopted a more conservative stance

Why Basel III will limit Chinese bank financing
Chinese banks' concerns are growing as counsel outline how the China Banking Regulatory Commission's implementation of Basel III will limit their financing

How Australia hybrid first clarifies Basel III implementation
The first Basel III-compliant Tier 1 hybrid bond to be issued by an Australian bank acts as a regulatory test case on Basel III implementation in the country

Basel III to prompt RMB innovation
The China Banking Regulatory Commission's implementation of Basel III will foster greater complexity in the offshore renminbi market

Why Basel III is bad for China
Implementation of Basel III in China would result in a vicious downward cycle. It should be postponed until developed countries have reached an agreement on the requirements, market participants have said

Europe concerns:

New trading book rules target value-at-risk
The Basel Committee on Banking Supervision's latest consultation on trading book capital rules signals a move away from the discredited value-at-risk model

REGULATOR INTERVIEW: France's AMF reveals lessons learnt post-crisis
The French regulator discusses the huge changes in financing economy, what he has learnt from the eurozone crisis, and whether his worries about the unintended consequences of regulation

LMA speaks out on CRD IV
Europe's Capital Requirements Directive 4 will harm the syndicated loan market and impair a vital source of liquidity for borrowers, according to the Loan Market Association

IBA speakers criticise Basel III capital requirements
Basel III plans to raise banks' capital requirements were slammed at an IBA session as both short-sighted and ineffectual

UK concerns:
How national implementation will create CRD IV uncertainty
Requirements that capital conservation and counter cyclicality buffers be implemented by national laws will create additional uncertainty for banks already facing a huge workload to implement Basel III and CRD 4 on time

US concerns:
US prudential standards to exceed Basel III

Today the Federal Reserve announced its long-awaited proposal for prudential regulation of systemically important financial institutions

The winners and losers under US Basel III
The Federal Reserve's June 12 proposal of rules implementing Basel III create a dubious future for US banks regarding Tier 1 contingent convertible capital, a battle on risk weightings, and capital raising problems for small banks

 


 

 

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