EU banking watchdog calls out lenders for inflating capital buffers

LONDON, June 27 (Reuters) – Banks in the European Union may be inflating the value of their high risk debt used for plugging capital gaps in a crisis, the bloc’s banking watchdog said on Thursday.

Banks began issuing so-called Additional Tier 1 (AT1) bonds, also known as contingent convertibles or ‘CoCos’, to bolster capital after the global financial crisis.

The bonds convert into equity or are written off if a bank’s capital levels drop below a certain level.

Source: REUTER