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Dutch Ministry of Finance Calls for Reassessment of AT1 Bonds

Miriam Mukuru


The Dutch finance department has called for a re-evaluation of risky Additional Tier 1 bonds issued by banks, calling for greater transparency.

"A reassessment of the complexity, transparency and regulatory qualifications of AT1 instruments may be needed," the Dutch Ministry of Finance said in a report published Monday.

AT1 bonds are risky debt created after the global financial crisis which act as safety buffers if a bank gets into financial distress and its capital levels fall below a certain threshold.

Some of the instruments that qualify as AT1 capital "turned out to be less transparent and clear than expected," which made AT1 bonds "less useful as actual capital," the ministry report said.

AT1 bonds came into the spotlight after Credit Suisse wiped out all of its outstanding AT1 bonds as part of the acquisition of the troubled Swiss bank by UBS Group in March 2023.

Puja Karia, head of Western European Banks at Fitch's credit research arm CreditSights, said the report isn't likely to lead to any regulatory changes because Dutch banks are regulated by the European Central Bank and the Dutch National Bank, not the Ministry of Finance.

Credit spreads on Dutch banks ABN AMRO, ING, and Rabobank aren't expected to react to the report as the concerns raised are unlikely to materialize in the short- to medium-term, she said in a note.


Write to Miriam Mukuru at


(END) Dow Jones Newswires

March 20, 2024 11:39 ET (15:39 GMT)

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