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High floor prices on contingent convertibles may reassure shareholders over dilution, but they rightly worry debt investors. That’s why Swiss Re’s use of an unfloored conversion option should be welcomed by investors — and considered by banks.
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The European Commission has indicated that it will soon release its crisis management proposals, after a further period of consultation on bailing in senior debt as part of resolution regimes for failing banks. But has the EC missed its opportunity to reshape the bank finance market?
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As the corporate bond market tested the limits of journalistic extremism this week (where does one go when “on fire” no longer seems adequate? Flaming supply? Out of control issuance? A raging inferno of a corporate bond market?), one long standing syndicator was MIA. Yes, sadly, the Irish lilt of UBS’s Barry Donlon was nowhere to be heard.
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Regulatory and political opposition to the City may be detracting from London’s appeal as a global financial centre, but the UK as a source of investment banking fees is as important as ever. And as David Rothnie writes, competition for talent is getting fiercer.
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The loan market is going to have to get used to a new pricing dynamic as Basel III bites. But countries are adopting the new standards at different speeds. The resulting pricing disparity is set to ratchet up the tension between borrowers and their lending banks.
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Investors in new style bank hybrids will face much greater risk of haircuts from regulatory intervention than from a bank breaching a 5.125% common equity tier one ratio. But that is no reason to scrap the capital trigger.
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Patriotism is the last refuge of a scoundrel, price cuts are the last ditch effort of a struggling retailer and — as we now know — short selling bans are the last hiding place for regulators that have run out of ideas
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Pricing new bond issues can be a delicate affair, and never more so than when a borrower is switching old bonds for new. So the market should not be too quick to judge a hefty rally on the back of a liability management exercise.
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HSBC is overhauling its investment banking operations and demanding more from its bankers, writes David Rothnie. The bank has been here before, of course, but this time it is taking a different approach to its more traditional rivals — and it seems to be paying off.
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Defenders of financial innovation have been too timid. There is a moral case to be made, which is being drowned by bleating on about cost-benefit.