Wachovia’s new $2.5 billion bank hybrid offering – Wits (Wachovia interest trust securities) – priced at the end of January, initially sparked controversy that the Federal Reserve had made a mistake in allowing the deal to qualify for tier 1 capital. But the Fed has stood by its decision to allow the structure into the tier 1 capital basket. This could prompt more innovation and more than $40 billion of new issuance.
Wits is a mandatory convertible into preferred shares after five years, on which interest payments are tax deductible. Since the mid-1990s until recently, the only tax-deductible hybrids acceptable to the Fed as tier 1 capital were trust preferred securities (Trups). Many market players believe that banks will replace some of their outstanding Trups issues as...
You must be a subscriber to access this archived content.
If your subscription includes access to the archive, please log in now to view.
To gain access to this content visit the subscription page or call our hotline on +44 (0)207 779 8999.
Subscribe online now and save up to 30% on your subscription.
If you are a trialist or subscriber, please enter your username and password at the top right-hand side of euromoney.com
Subscribers to Euromoney benefit from:
- 12 months access in print and online - on euromoney.com, read the latest issue early online, search for specific developments by region or sector, interrogate the results of Euromoney's benchmark polls, and view the archive dating back to 1996
- More than 30 specialist research guides free
- The results of Euromoney’s polls and surveys
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Click here to subscribe