Europe’s banks split on capital plans ahead of EBA deadline

04 Jan 2012

With capital in increasing focus this year, tier one hybrids and the European Banking Authority’s contingent capital securities are being considered by the strongest bank borrowers. But FIG market participants are pessimistic about attempts to change the EBA’s Coco term sheet, and say that most banks will use deleveraging, profit retention and liability management exercises to reach the 9% core capital requirement by the end of June.

Efforts continued over Christmas to influence the European Banking Authority’s stance on contingent capital securities.

The authority said on December 8 that banks could use a convertible instrument, which takes a CRD IV-style additional tier one host, to reach the 9% core capital level they must comply with ...

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