Germany’s Commerzbank has this year embarked on a sizeable liability management exercise. In the first transaction, the bank tackled the lower part of its capital structure, effectively swapping out most of its Basel II-compliant hybrids into core Tier 1, helping to create €900m of core capital for the bank.
In part two of the exercise, concluded in March, Commerz focused on its Tier 2 capital, converting some of its outstanding non-Basel III-compliant stock into €1.25bn of Tier 2 capital that will count towards Basel’s grandfathering bucket.
