CoCo nuts

摘要

Mention hybrids these days, and most people think of fuel-efficient cars. In banking, however, the word has less pleasant connotations. Hybrid forms of capital were meant to combine the cheapness of debt with the support that equity offers to banks in times of crisis. Yet they proved to be less well-bred than originally planned. When an extra capital cushion was needed to protect depositors and other creditors, these hybrid instruments could not provide it without the bank first defaulting.