$275 Billion AT1 Bank Funding Market at Risk of Tailspin

The transcript discusses the implications of a UBS deal, highlighting the conversion of liabilities into equity and its impact on bondholders. It addresses the challenges banks face in securing funding, particularly in the European context, and compares the situation to past financial crises like Lehman Brothers. The discussion also touches on the potential for bank runs and the role of central banks in stabilizing markets. The speaker expresses skepticism about certain financial instruments, such as 80 ones and Cocos, due to their risk profiles.

What is the primary benefit for UBS in converting liabilities into equity?

• It increases their debt.

• It enhances their liabilities.

• It reduces their equity.

• It improves their liquidity.

How does the speaker compare the current banking situation to the Lehman Brothers collapse?

• It is slightly better than Lehman Brothers.

• It is exactly the same.

• It is worse than Lehman Brothers.

• It is not comparable to Lehman Brothers.

What is a major concern for European banks according to the speaker?

• Increased equity.

• Reduced funding options.

• Higher interest rates.

• Lower credit profiles.

Why does the speaker dislike AT1s and CoCos?

• They are easy to understand.

• They offer high returns.

• They are risk-free.

• They can result in complete loss.

What does the speaker suggest is necessary for AT1s and CoCos?

• Increased risk.

• Higher returns.

• Legal framework changes.

• More investor involvement.