EU regulatory capital: a guide to structuring new deals

Author: | Published: 30 Jul 2013
  • With the June 2013 publication of Europe’s Capital Requirements Directive package, banks' attentions have shifted to total capital ratios;
  • This includes additional tier 1, tier 2, and in some jurisdictions contingent capital (or CoCos);
  • But before coming to market with new deals, issuers must negotiate a confusing variety of design considerations including loss absorption mechanisms and triggers, coupon deferral, and local tax regimes;
  • Market participants expect the first two or three deals for each type of loss absorption conversion to set the standard for each structure.