• Requirements for all forms of non-common equity (‘going concern’) capital to now have equity conversion triggers in order to be counted as capital will further increase the cost of capital for banks. Additionally, the requirement of bail-in debt, a form of (‘gone concern’) capital, which is also required to convert to common equity at resolution, further underscores the
unwillingness of regulators to ever having to use taxpayer money to bail out failed banks in the future.
• These capital requirements will ultimately lead to an environment of ‘ring-fencing’, where the ability for multinational banks to move or repatriate capital freely between different jurisdictions will be restricted.