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A contingent convertible bond (CoCo), also known as an enhanced capital note (ECN), [1] is a fixed-income instrument that is convertible into equity if a pre-specified trigger event occurs. [2] The concept of CoCo has been particularly discussed in the context of crisis management in the banking industry. [ 3 ]
A revaluation reserve is a reserve created when a company has an asset revalued and an increase in value is brought to account. A simple example is the situation where a bank owns the land and building of its head-offices and bought the properties for $100 a century ago. A current revaluation is likely to reflect a large increase in value.
Basel III requires banks to have a minimum CET1 ratio (Common Tier 1 capital divided by risk-weighted assets (RWAs)) at all times of: . 4.5%; Plus: A mandatory "capital conservation buffer" or "stress capital buffer requirement", equivalent to at least 2.5% of risk-weighted assets, but could be higher based on results from stress tests, as determined by national regulators.
Until the last few weeks, stocks had continued to climb to new records as bond prices fell. A key turning point came recently when the S&P 500's earnings yield fell below the 10-year Treasury ...
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc. In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders.
To be well-capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 6%, a combined Tier 1 and Tier 2 capital ratio of at least 10%, and a leverage ratio of at least 5%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels.
A liquid asset is an economic resource that can be quickly and easily converted into cash. Liquid assets can be sold or exchanged without significantly impacting their value. Examples of liquid ...
Pros and cons of investment-grade bonds vs. high-yield. These two classes of bonds have both differences and similarities. For example, when it comes to income potential, you will earn a smaller ...