New APRA chairman John Lonsdale wants to remind banks and investors exactly where Tier II bonds stand, even as Westpac was allowed to call a $250 million deal.
the market reaction meant he had sent the message and that investors had to accept they were there to safeguard banks and depositors.
Tier I and Tier II bonds form part of Australian banks and insurers regulatory capital requirements. Unlike standard bonds, issuers can under severe circumstances extend repayment debts or even halt distributions to preserve capital and provide an additional layer of protection for depositors.APRA also has authority to force issuers to enact these clauses and approves all requests to repay or issue capital.
The overwhelming expectation is that, aside from a severe crisis, institutions will repay Tier I or Tier II bonds at their first available call date. “If you are a bank, and you have a call coming up on an instrument, and it is uneconomic, we want you to adhere to the standard, and we don’t want any erosion of these instruments, so they could be seen as non-permanent, or not of quality.”Most Tier II bonds issued in the Australian market have 10-year maturity with a call date after five years, which issuers almost always honour.
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Insurers may cut premiums for climate action: Zurich chair SummerhayesFormer APRA member Geoff Summerhayes has been appointed chairman of the Swiss insurance giant’s Australian business.
Read more »
Looming El Niño could push us into a new era of global heatingAnalysis: The language Bill Gates used about climate change during his visit to Australia was unlike any you hear from climate scientists or politicians. It was brutal
Read more »
Universities weighing up major changes to prevent new form of cheatingUniversities are rethinking their approach to innovative artificial intelligence programs in a move to prevent students from cheating in exams and assessments. 7NEWS
Read more »
Bulk-billing GP crisis hits all-time high, according to new reportOver 50 per cent of general practices across the country are charging Australians out-of-pocket fees for a visit to the doctor.
Read more »
Woman, 29, arrested for allegedly posing as high school student in New JerseyInvestigators accuse Hyejeong Shin of providing fake birth certificate to enroll in New Brunswick high school
Read more »
Gucci announces Sabato de Sarno as its new creative directorDe Sarno, who spent 13 years reinvigorating Valentino, replaces Alessandro Michele, who led a stellar renaissance at the brand
Read more »