Money In The Bank: 2H Outlook: regulation risk returns

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Money In The Bank: 2H Outlook: regulation risk returns

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Money In The Bank

2H Outlook: regulation risk returns

Rating Change - Credit

What changed in 1H26? Regulation is back 15 July 2026

European banks are poised to enter another period of regulatory flux, in our view. For High Grade Credit

AT1, we now see some modification of the format of the instrument, however ill-advised Europe

(in our opinion) that may be. On the agenda may be an increase in the trigger level of Banks

AT1s (10%, anyone?) or a preference for equity conversion over write-down securities. Richard Thomas

Oddly, we have even seen suggestions for more cumulative features to be reintroduced. Research Analyst

Issuers have been trying to get ahead of any changes by introducing what is in our view BofASE+33 1 8770(France)0291

overly favourable (to the issuer) variation language that might allow the banks to change richard2.thomas@bofa.com

terms to accommodate future regulation. We prefer bonds that don’t have that language Luis Garrido, CFA

Research Analyst

over the increasing number that do. We like the recent Standard Chartered $7% or DB BofASE (France)

€6.75% (both OW). We also add an OW on the new Erste €5.875%. luis.garrido@bofa.com

Katharine Lennon

TLAC / MREL decompression ResearchMLI (UK) Analyst

Greater alignment between TLAC and MREL also seems likely - we see a streamlining of katharine.lennon@bofa.com

subordination requirements which should result in a modest uptick in SNP issuance as

the issuer base broadens and deepens. More importantly for us is that bail-in risk

increased after the problems with its execution were patched by the SEC’s non-action Exhibit 1: Recommendations in report

Regulation is back: our key tradesletter, negotiated with the BOE.