The August release of the Basle Committee’s consultative document on loss absorption underscored the regulator’s determination to punish the subordinated debt market for not shouldering its fair share of the pain since mid-2007. The means by which the Basle Committee plans to do this – permanent write-off, conversion to equity or a combination of the two – had already been well flagged up in its December 2009 capital adequacy proposals (see Bank capital and regulation: Damned if you do, damned if you don’t, Euromoney June 2010).
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