This week, lower tier banks experienced punitive costs to access international capital markets. And they paid up, not for regulatory capital, but for senior funding.
European lenders have fared much better in the capital markets than most US banks, which have been dogged by the US regional banking crisis ever since the collapse of Silicon Valley Bank.
Despite this, not a single major European bank has dared to print a capital deal in the international market since the end of February.
In local markets, it has been a different story. Just one month after Credit Suisse’s additional tier one bonds were completely written off, Japanese investors were willing to provide Sumitomo Mitsui Financial Group with ¥140bn ($1.04bn) of AT1 capital in a vote of confidence for a national champion.
In Switzerland, Raiffeisen Schweiz has this week started marketing a replacement for an AT1 deal it called, even as the law suits from disgruntled Credit Suisse holders pile up.
In Australia, ANZ priced the first large tier two offering from a major bank since March, scooping A$1.15bn. And across the Tasman Sea KiwiBank last week issued a NZ$200m tier two. There have been local capital deals in Norway too.
Investor diversification is crucial for any issuer. But in times of stress, there's no place like home.