|Should the Basel
Committee have allowed CoCos to be endorsed in capital
rules for systemic banks?
The Basel Committee has announced that contingent
convertible bonds (CoCos) will not be eligible for the
additional capital buffer to be required of the world's biggest
In this month's Big Question, the decision to exclude CoCos
from this eligible capital for global systemically important
banks has divided the industry.
The surcharge is part of a sweeping regulatory response to
the financial crisis, aimed at preventing a repeat of the
costly bank bailouts worldwide and making them safer by
"The additional loss absorbency requirements are to be met
with progressive common equity tier 1 capital requirement
ranging from 1 percent to 2.5 percent, depending on a bank's
systemic importance," said the Group of Governors and Heads of
Although the central banks have opted for a smaller
surcharge than predicted, it...