|
Managing
Capital in the New Regulatory Framework
Sunday,
June 3, 2007
1:00-4:00 pm
Jim
Penny, Jay Weintraub, & Jeffrey Wishner, Keefe, Bruyette &
Woods
Patrick S. Brown, Sullivan & Cromwell
TOPIC
A: Pooling Now Makes Trust Preferred Securities Affordable for
Community Banks:
Background: Trust Preferred Securities (TPS) provide a way for banks to
raise Tier 1 Capital, receive a tax deduction and avoid shareholder
dilution. TPS are treated as Tier 1 Capital for regulatory purposes
and are treated as debt for federal income tax purposes. Since
dividends (interest) on TPS are deductible for tax purposes, the
effective cost of TPS for the issuer is about 40% less than its
nominal coupon rate or what would be the cost of ordinary preferred
stock. The pooling of TPS offers a number of community banks the
opportunity to access this form of equity in a way that they
probably could not cost-efficiently do on their own. With pooled TPS,
community bank holding companies' Trust Preferred Securities are
purchased by a pooling vehicle that in turn sells securities to
investors, buying interests in the pool rather than securities
issued by individual participating banks.
Further
areas to be discussed in this session:
-
Capital
Treatment Of Trust Preferred Securities
-
Market
Profile
-
How
Banks Use Trust Preferred Securities Capital/Funding
-
How
Banks Benefit By Pooling
-
New
Cost Savings
-
Other
Debt Capital Market Solutions
TOPIC
B:
BASEL
II, The New Accord, versus
Basel
1A
Background:
Basel II, (correct full name is the International Convergence of
Capital Measurement and Capital Standards - A Revised Framework)
is the second Basel accord and represents recommendations by bank
supervisors and central bankers from the 13 countries making up the
Basel Committee on Banking Supervisors (BCBS) to revise
international standards for measuring the adequacy of a bank’s
capital. Implementation of the Accord is expected by 2008 in many of
the over 100 countries currently using the Basel
I accord. A final approach for the
United States of America , generally referred to as
Basel
IA , has yet to be agreed upon by the USA ’s various regulators.
Registration
Fees
Attending
Conference
$70 WIB Member
$95 Nonmember
Not
Attending Conference
$95 WIB Member
$125 Nonmember
|
