Post-Brexit rule divergence may affect UK banks' AT1 loss absorbency – Fitch

U.K. regulatory divergence from the EU's Capital Requirements Directive V, or CRD V, post-Brexit could reduce the loss absorbency of U.K. banks' additional Tier 1, or AT1, capital securities, Fitch Ratings said in a report published Dec. 2. [...]the PRA is expected to ask banks to stop AT1...

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Bibliographic Details
Published inSNL European Financials Daily
Main Author Damyanova, Vanya
Format Trade Publication Article
LanguageEnglish
Published Charlottesville SNL Financial LC 04.12.2020
Subjects
Capital requirements
Discount coupons
Profits
United Kingdom > UK
United States > US
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Summary:U.K. regulatory divergence from the EU's Capital Requirements Directive V, or CRD V, post-Brexit could reduce the loss absorbency of U.K. banks' additional Tier 1, or AT1, capital securities, Fitch Ratings said in a report published Dec. 2. [...]the PRA is expected to ask banks to stop AT1 coupon payments to conserve capital if they were to breach their combined buffer requirement "due to a significant loss, particularly when caused by idiosyncratic weaknesses rather than a market-wide stress," the agency added. [...]the U.S. rules permit a bank in the bottom quartile of its capital conservation buffer to make distributions, subject to approval from regulators," the agency said.
ISSN:2156-5392