RAC reduction for SocGen and Danske as S&P changes methodology
Proposed changes to Standard & Poor’s bank hybrid criteria would remove a key benefit from deals issued in 2012 by Société Générale and Danske Bank which were specifically structured to give the issuers risk adjusted capital (RAC) credit with the ratings agency.
The deals, which were classified as tier two capital, gave the issuers an equity ratio boost under S&Ps rating criteria. But proposed changes to S&Ps criteria would emphasise the importance of regulatory classification in the agencys assessment of the equity content of hybrid capital instruments.
Under the proposal,
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