Tag: Subordinated Debt

Bank Capital Planning: 2015 Style

Bank Capital PlanningConclusion Talk to your investment banker, lawyer or other professional about what might be the best capital structure for your bank given the current state of the industry and the market. Almost every bank benefits from a mix of both debt and equity and structural features like maturity, amortization, conversion/exchangeability, deferral options and callability can all play a material role in price. Whatever the structure, in the next year, we will likely be back to one of the cheapest

Now that the economy has healed, liquidity is plentiful and bank performance is on the verge of getting back to normal, we thought we would revisit what a bank’s capital structure looks like and the associated loss given defaults for each. In 2015, we sit in the middle of an ideal story that can be told about banking that goes along the lines of record credit quality for new origination, the highest barriers to entry the industry has ever seen, higher interest rates, better bank regulatory supervision and enhanced risk management.

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