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Getting away from it all seemed to be the name of the game for much of the FIG world in the week following Easter. The European Banking Authority did its best to scupper holiday plans, releasing its 57 page consultation on regulatory technical standards for own funds a day before the long weekend. That added to the pressure a day before Deutsche’s Gerald Podobnik was due to set off for a relaxed break in Austria, and caught others on the hop: Royal Bank of Scotland’s A.J. Davidson was on the road — literally, cruising down the all-American sounding West Side Highway — dealing with patchy signals as he dialed in to London to stay on top of the news.
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Asia’s loan bankers may have just been through a dismal quarter, but there is always someone worse off. They should count themselves lucky they are not securitisation bankers, who have suffered a dismal few years. Perhaps by working together, bankers in the two areas can add a bit of zest to the loan market — and some much needed volumes to the securitisation market.
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In its final consultation on bail-in, the European Commission is asking key stakeholders whether short term debt should be included in burden-sharing arrangements. This clashes with the drive by other regulators to make banks less reliant on short term funding. The result? Confusion at a time when certainty is needed.
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Covered bonds are moving towards a system of labelling, designed to act as a kitemark of quality. But investors should remember: there is more to credit analysis than ticking boxes. Weak deals can pass through labelling systems, while great deals can get excluded.
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Reports that some banks are already thinking of paying back funds borrowed from the European Central Bank under its longer term refinancing operations should be cautiously welcomed. But at the same time, stigmatisation of those that stay in the scheme for the full three years would not be in anyone’s interest.
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Rumours of the first Australian and Kazakh sukuk are bubbling up again. We’ve heard it before, but perhaps this time the reports will be followed by action. For the sake of the market, let’s hope so. The Islamic finance market now needs to move to the next level, with broader international involvement.
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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.