Banks confident over innovative hybrids

Author: Nicholas Pettifer | Published: 9 Feb 2010

Despite uncertainty over the future of regulatory capital rules, banks are confident that innovative hybrid products will eventually provide core capital for financial institutions.

“I am optimistic that we will evolve into a situation in which there are more hybrid securities of one form or another,” said Steven Sahara, global head of hybrid capital structuring at Calyon. “They will service the financial community, users of financial systems and therefore society,” he said.

Sahara was speaking on the panel of an IFLR web seminar in association with Morrison & Foerster. The discussion focussed on effective structures that may be adapted and mimicked by the market.

Lloyds Bank’s contingent capital issuance in November last year was held up as an example. The £7.5 billion ($11.7 billion) 10-year exchange offer had a fixed-interest...