Basel updates
The Basel Accords address how much capital banks need to put aside to guard against financial and operational risks. Through thought leadership, key messages and summaries, our Basel updates keep you informed of the latest developments and how the regulations impact various aspects of the financial industry.
Current issue: Basel III and beyond: The trillion dollar question
PwC's Basel updates series, December 2011Can bail-in capital bail out the banking industry?
Bail-in capital is central to the regulatory reform of banks, and can help to restore confidence in the industry. The Basel Committee on Banking Supervision have announced that all non-core equity capital instruments would have to have a bail-in feature from 1 January 2013.
Regulators and banks now have just one year to make this complex regulation workable, and banks that do it well will have greater competitive advantage over other institutions.
The regulatory environment for banks is undoubtedly complex. In PwC’s latest publication, we examine the challenges and practical issues that need to be addressed before bail-in capital can become a reality.
- Defining bail-in capital
- The rationale and the problem of the bail-in debt proposals
- Where are we now?
- The size of the capital problem
- Debt-holder risk management – avoiding the death spiral
- Systemic considerations – protecting against contagion
- Legal issues – treating investors fairly
- Accounting issues – how will bail-in debt be valued?
- Tax – should bail-in debt be treated as debt or equity?
- Pricing – what price will make bail-in debt attractive to investors?
- A look to the future
