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Credit Suisse’s operational risk bond is a beautiful piece of financial engineering — an elegant demonstration that where there’s a buyer or seller, there’s a capital markets solution to a problem. But actually, what it demonstrates is the absurdity of operational risk rules.
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The UK mid-market for investment banking is facing another round of consolidation after regulatory pressures and a faltering IPO market have wrought havoc on the sector, writes David Rothnie.
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Adding retail investors to the buyer base of subordinated bank debt, as was suggested to the European Parliament this week, wouldn’t be nearly enough to make the Bank Resolution and Recovery Directive (BRRD) a workable, practical resolution framework. If retail are going to be allowed into the market, it shouldn’t be because their lack of expertise makes them a good foundation for a stable financial system.
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A slew of international financial institutions have recently found success in selling dollar notes in the Taiwanese domestic bond market, with ABN Amro breaking new ground last week with a tier two deal. Taiwan’s local investors have proved resilient during tough times and with the market looking increasingly attractive, there are plenty of opportunities for FIG issuers. -
Buried in a hay bale of legal documentation last week, the European Union’s final draft of margin rules for uncleared swaps contained a joke that is sure to needle major banks. The question is whether anyone, including regulators, will still be able to smile at it when the September 1 deadline passes.
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Regulators and politicians have suddenly found the will to defend the additional tier one market — a market they created — from the violent shocks it experienced early this year. In particular, they want to give AT1 investors some reassurance about skipped coupons.
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“I’m not going to let that stand,” said Bank of England governor Mark Carney, calmly.
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The reaction to Thursday’s ECB announcement brings to mind the phrase 'chasing the dragon'.
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The German bank is building on momentum in European DCM with an expansion of its corporate finance business, writes David Rothnie.
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Regulation is never going to have the beauty and brevity of a haiku or a nice tweet, but simplicity is still a virtue and complexity a red flag. The Basel Committee’s Operational Risk rules are mind-bendingly complicated, duplicate other regulations and may actively harm prudential supervision. They are the wrong tool for the job.
