Mike Lane (Slaughter and May) explains how the new rules might work in practice.
It is rather fitting that the UK’s new hybrid capital instruments (HCI) regime was announced almost 20 years to the day since the October 1998 issuance of guidelines by the Basel Committee that gave birth to the so-called ‘innovative Tier 1 capital’ for banks. Under the 1998 guidelines instruments could constitute Tier 1 capital notwithstanding that they took the legal form of debt rather than equity providing that they satisfied certain key requirements including that they must be:
issued fully paid permanent (perpetual) and non-cumulative;
able to absorb losses within the bank on a going concern basis; and
junior to the bank’s depositors general creditors and subordinated debt.
Those guidelines gave rise to the possibility that a UK bank could issue...
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Mike Lane (Slaughter and May) explains how the new rules might work in practice.
It is rather fitting that the UK’s new hybrid capital instruments (HCI) regime was announced almost 20 years to the day since the October 1998 issuance of guidelines by the Basel Committee that gave birth to the so-called ‘innovative Tier 1 capital’ for banks. Under the 1998 guidelines instruments could constitute Tier 1 capital notwithstanding that they took the legal form of debt rather than equity providing that they satisfied certain key requirements including that they must be:
issued fully paid permanent (perpetual) and non-cumulative;
able to absorb losses within the bank on a going concern basis; and
junior to the bank’s depositors general creditors and subordinated debt.
Those guidelines gave rise to the possibility that a UK bank could issue...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
