Higher Basel III pricing deters Asian banks from issuing new Tier II capital

price-rise

The introduction this year of new Basel III pricing for Tier II capital has made Asian banks wary about testing the market and, combined with a flurry of issuance at the end of 2012, has led to abnormally low capital issuance to date this year.

From January 1, old-style Basel II instruments must be phased out by 10% per year. With uncertainty about the pricing of the new instruments, many banks are taking a cautious approach, according to Pramod Shenoi, director in capital markets at Standard

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