Lower tier banks face ugly LT2 choice as BPM scrapes through

The growing challenge for smaller banks seeking subordinated debt in the bail-in era was underlined this week by Banca Popolare di Milano’s Eu400m lower tier two issue. With worryingly high volumes of sub debt reaching call dates shortly — as much as Eu60bn this year across the top 50 European banks — lesser issuers face a tough choice between the stigma of failing to call their deals and having to raise new capital from investors sceptical of the asset class.