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 miriam.mukuru@wsj.com
(END) Dow Jones Newswires
March 20, 2024 11:39 ET (15:39 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.-
What History Tells Us About the Fed’s Next Move
-
What’s Happening In the Markets This Week
-
Alphabet’s New Dividend: What Investors Need to Know
-
Going Into Earnings, Is Palantir Stock a Buy, a Sell, or Fairly Valued?
-
Going Into Earnings, Is Eli Lilly Stock a Buy, a Sell, or Fairly Valued?
-
What’s the Difference Between the CPI and PCE Indexes?
-
5 Stocks to Buy That We Still Like After They’ve Run Up
-
Markets Brief: Stocks Are Starting to Look Cheap Again
-
AbbVie Earnings: Next-Generation Immunology Drugs Help Offset Humira Biosimilar Pressure
-
Exxon Earnings: Ignore Earnings Shortfall as Long-Term Growth and Improvement on Track
-
American Airlines Earnings: We See Costs Overshadowing Market Share This Year
-
Snap Earnings: Advertising Growth and Snapchat+ Drive Monetization
-
STMicro Earnings: We Still See an Attractive Margin of Safety Despite a Poor First-Half Forecast
-
Alphabet Shares Surge on Strong Earnings, Dividend Surprise
-
Microsoft Earnings: Firm Beats Forecasts on Strong AI and Cloud Demand
-
PG&E Earnings: Near-Term Regulatory Certainty Supports Industry-Leading Earnings Growth