Newsletter June 2013: A ‘richer regulatory Capital Accord’ envisaged

HELSINKI – The shape of a “richer regulatory Capital Accord for the future” that goes beyond Basel III, was set out by Bank of England deputy governor Paul Tucker in a mid-June speech that posited a three-level capital structure to increase the resilience of banks. In addition to the tougher equity capital requirements of the Basel III framework, currently being implemented around the world, Tucker made the case for contingent capital instruments (CoCos) – bonds that convert into equity if a bank’s capital ratio falls below a prescribed level – and longer-term bonds that can be bailed-in if the bank fails.