The new asset class introduces an additional
layer of bail-inable debt but doubts remain as to how it should
For the past four years, banks have focused on issuing
common equity tier 1 (CET1 ie common shares), additional tier 1
(AT1 also known as CoCo bonds) and tier 2 (supplementary)
capital instruments as provided for in the Capital Requirements
Regulation (CRR) to meet their regulatory requirements.
Recently, such a spectrum of asset classes has been broadened.
Latest headline news refer to senior non-preferred bonds
– an asset class issued by European banks that is news
to many European capital markets. As senior non-preferred bonds
become increasingly en vogue, the rationale behind the creation
of this new asset class needs to be looked into, as do specific
issues arising with respect to the still evolving legislation
providing for them with a particular focus on the German