Australian Financial Review reports on CQS Founder Sir Michael Hintze’s comments at the Citi investment conference in Sydney.
During the conference, Sir Michael noted that he sees bank hybrids as attractive investments in the current economic climate:
[He] said he "sensed value" when looking at a lot of bank "additional Tier 1" instruments "because I don't believe banks are insolvent or the option [to bail-in the instruments] will be exercised".
"Our view is the Tier 1 market is very difficult for [regulators] to exercise that option without truly, I think, making huge waves in the rest of the market," he said. "It is such a drastic thing to happen … the signal it sends to the rest of the system [would] scare things a lot."
Sir Michael also commented on the potential impact of new regulations being finalised by the Basel Committee on Banking Supervision, noting that they posed a bigger risk to some banks than solvency or liquidity:
"I don't see any banks out there in general where there is a real solvency issue … but whether the regulatory capital will allow them to do business … that is a big deal," he said. "I believe we are no longer in a situation where there is going to be an imminent collapse unless the regulators want to push them down that road."