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Today’s capital regime for banks is the result of compromise and incrementalism. Hardly a surprise, but the result is unworkable. CFA-qualified, brain-on-a-stick analysts will breeze through a series of 3D Sudoku puzzles, yet struggle to understand the capital situation of a bank.
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As the banking industry’s painful readjustment continues, the first quarter’s awful market numbers show that big, diverse, universal banks, contrary to recent management mantras, actually do have an advantage.
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Money market fund reform regulation which comes into force in October this year will have serious consequences for banks’ funding. What are they doing about it?
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Vakifbank’s debt euro Turkish covered bond is good for investors, good for emerging markets borrowers and good for the global economy. But the deal would probably never of happened without the intervention of the European Central Bank.
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South Korea’s regulators are widely expected to adopt new rules that force banks to sell perpetual additional tier one bonds, something that was prohibited until now. The move will push lenders to execute more expensive offshore capital raising and while the shift will improve the soundness of Korea’s banking system, it will take the market time to adjust to the new regime. -
Mario Draghi, European Central Bank president, is known for playing with his bazooka. Right now, it feels more like his Badedas. The capital markets are swimming in froth, as surely as if Draghi had doused them with revitalising bath goo.
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Several covered bond issuers have removed the swaps in their covered bond programmes in the face of onerous regulatory obligations. This has improved their funding efficiency and given investors a less risky, more transparent and potentially higher yielding product. Others should follow.
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Several covered bond issuers have removed the swaps in their covered bond programmes, in the face of onerous regulatory obligations. This has improved their funding efficiency and given investors a less risky, more transparent, and potentially higher yielding product. Others should follow.
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The UK moved quickly, and a long way, on bank capital, but apparently it hasn’t done enough. In a year when the Basel Committee is supposed to be finally finishing its own capital rules, do we really need more uncertainty?
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Public outrage around tax avoidance, set ablaze by the Luxembourg Leaks last year and now superheated by the recent “Panama Papers”, is becoming visceral. And public disgust is a pretty reliable leading indicator of big trouble for banks.
