Normal
Another issue could be that Bank Bonds will have a bail in clause. The GFC made bond holders believe they were immune to bad decisions by bank CEOs and they pretty much got their money back.New bonds, like new Hybrids, will have bail in caluses so if APRA decides one of the majors in in deep financial doo doo they can force hybrids then bold holders to convert into equity.How much that equity will be worth, who knows. It should hopefully make debt holders a bit more interested in what the banks are up to, and the banks will have to be a bit more conservative otherwise the risk premium they pay for borrowings will increase.
Another issue could be that Bank Bonds will have a bail in clause. The GFC made bond holders believe they were immune to bad decisions by bank CEOs and they pretty much got their money back.
New bonds, like new Hybrids, will have bail in caluses so if APRA decides one of the majors in in deep financial doo doo they can force hybrids then bold holders to convert into equity.
How much that equity will be worth, who knows. It should hopefully make debt holders a bit more interested in what the banks are up to, and the banks will have to be a bit more conservative otherwise the risk premium they pay for borrowings will increase.
Hello and welcome to Aussie Stock Forums!
To gain full access you must register. Registration is free and takes only a few seconds to complete.
Already a member? Log in here.
