2010 was the year concerns about the health of European sovereigns eclipsed the banking crisis. For the first time since the credit crunch of 2007, financial institutions were no longer the sole target of public opprobrium, and concern about defaults centred on entire countries. Bailouts were no longer an enforced favour from taxpayers to their national banking systems but had become instead an international rescue mission mounted to prevent the EU bloc from foundering on its own economic contra

With just two contingent capital deals successfully completed so far, the asset class is still in its infancy. Its supporters argue that it could represent the future of the hybrid market. But with continued uncertainty over the regulatory treatment of the structure, it is still too early to tell. Lloyds was first out of the traps with a contingent capital deal last November, a €7.5bn Lower Tier 2 transaction that is convertible into equity if a core Tier 1 threshold of 5% is breached. That trad

Financial institutions issued over €110bn and €23bn of guaranteed senior unsecured bank debt in Europe by the first week of September. Full-year supply is on course to reach forecasts of €150bn in senior bank debt, with possibly €45bn of guaranteed bonds, according to Societe Generale Corporate and Investment Banking. Issuance in January alone accounted for €32.8bn in senior bank debt, and €9.3bn of guaranteed notes. By the end of April it totalled €72.7bn non-guaranteed and €23bn guaranteed bon

After many months of anticipation, last Sunday the Basel Committee finally revealed the new capital ratios. Common equity, or core Tier 1, will be increased from 2% to 4.5% while the Tier 1 ratio will be raised from 4% to 6%. The market will have two years from January 2013 to accomplish this – an achievable task for most banks. A 2.5% capital conservation buffer composed entirely of common equity, rather than a proportion of contingent capital as some had hoped, will be introduced between 2016

It was all change for the Lower Tier 2 market on August 19, when the Basel Committee released its new consultation document entitled “Proposal to ensure the loss absorbency of regulatory capital at the point of non-viability”. Under the terms of the proposal all regulatory capital instruments will be required to contain a mechanism in their documentation ensuring that they will take a loss at the point of non-viability. This, says the Committee, should take the form of a write-off or conversion

At first glance, the progress made by a core group of financial institutions since the release of the European banks stress tests on July 23 was impressive. The following week saw BBVA become the first Spanish bank to issue unsecured senior debt since April, when it sold a €1.25bn five-year note. The price at which it sold the notes – mid-swaps plus 170bp – was also 30bp inside where an array of syndicate sources had thought it likely to print. “The market has improved hugely from the conditions

The European Central Bank launched its covered bond purchase progamme in June 2009. Its purchase of covered bonds helped to stabilise prices and boosted issuance to a record €105bn in the first half of the year. The programme, which also helped the covered bond market weather the sovereign debt storm, came to an end in June, raising concerns about the market’s sustainability. Despite the removal of the safety net, the market has rebounded sharply. Covered bond issuance enjoyed a late summer surg

In what has almost become a tradition for Rabo in recent years, the bank began the year with a blowout 10-year deal of €3.5bn. It was the first of a diverse range of transactions across currencies, maturities and formats. The bank’s approach to the market is predictable in that it funds through the cycle, has a very liquid curve and prides itself on working with investors. “Deal performance is massively important to us and we provide liquidity in our own paper like no-one else,” said Michael Gow