FSB, Deutsche clash over CoCos

Author: | Published: 23 Dec 2011

When it was revealed that a Financial Stability Board (FSB) official and a Deutsche Bank deputy general counsel were going to share a panel session at the IBA’s annual conference in Dubai on November 2 on the use of contingent convertible instruments (CoCos), it was only a matter of time before the sparks began to fly.

The audience didn’t need to wait long. Following a general overview of the state of regulatory progress by various European and US lawyers, Eva Hüpkes of the FSB announced that CoCos would not be able to be in global systemically important financial institution (G-Sifi) buffers – news that had not been made public at that stage.

Hüpkes of the FSB said that they had considered the pros of allowing CoCos in the G-Sifi buffer, the shareholder discipline effect and lower costs.

“But at the end, those...