Honey, I shrunk the banks. The case for bank credit over equity

It’s been a really great couple of years for the banking sector – after a decade or more of zero interest policy when every year that went by bank margins fell, suddenly banks have lots of margin to play with as interest rates have risen to more normalised levels.

That’s Asda price

You can almost hear the gasps of those who have recently looked to refinance their mortgages, shocked about the increase in monthly payments they are having to make.

A less stressful time

Last week saw the release of the long-awaited bank stress tests for the UK banking system. This is the first ‘normal’ test following the Covid pandemic and the delay caused by the Russian invasion of Ukraine.

Cash is still king

This time last year I wrote about the short end of the yield curve – those fixed income securities with short maturities and reduced price risk from movements in interest rates because of their very short duration.

AT1: The regulator has your back

According to Bloomberg yesterday, the European Banking Authority has been holding talks on ways to boost investor interest in the AT1 market after Switzerland’s shock decision to wipe out $17bn of Credit Suisse notes.

UniCredit to Early Redeem EU1.25bn AT1 Subordinated Notes

This is the headline we were greeted with this morning. In the first potential, optional redemption of an AT1 bond since the UBS purchase of Credit Suisse, UniCredit has elected to redeem or “call” its AT1 at the first call date.

Is Chinese decoupling possible?

Perhaps the greatest realisation over the last 3 years for corporations and governments has been the extent to which the global supply chain is ultimately dependent on China for labour, materials, and transportation…