Bank Capital Hybrids

This course looks at:

  • Hybrids and regulators’ perspective
  • Hybrids and rating agencies’ perspective
  • Hybrids features and modelling
  • Hybrids and the credit crunch

Hybrids and regulators’ perspective

  • Standard & Poor’s vs. Moody’s vs. Fitch
  • Conditions and recognition of equity content
  • Similarities and differences

Hybrids features and modelling

  • Structuring for tax reasons
  • Step-ups
  • Cash/non-cash incentives to redeem
  • Deferral triggers
  • Mandatory/optional conversion into equity and dilution impact
  • Forecasting capital ratios
  • Forecasting potential for hybrids issuance given target capital structure

Hybrids and the credit crunch

  • Issuing hybrids to raise capital from sovereign wealth funds at onset of crisis
  • Hybrids vs. Straight equity issues
  • Role of hybrids in expected state-funded recapitalisation of banks
  • Protecting taxpayers’ money & offering upside
UK
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