Lately, European bank treasurers have been receiving a lot of suggestions for deals designed to improve their return on capital.
They should be receptive to these ideas – even if they balk at the fees being asked – because they are under growing pressure to improve return on equity.Of course, banks can do this by cutting costs or improving their lending practices, but a bit of financial jiggery-pokery helps as well. With a collaterallized loan obligation here and a hybrid tier-one deal there, banks have found that they can squeeze an overweight business into a slim-line balance sheet.
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