Hybrids still on the menu

So decoupling is not a myth. While regulators in the US and Europe are pressing banks to operate under a stricter capital regime – essentially raising more equity funding – in the emerging markets hybrid debt is still proving to have an important role.

In Russia, for example, where banks are struggling under the growing weight of bad debt, the government’s recapitalization plan includes the provision of subordinated loans. Last month Alfa Bank became the first local privately owned bank to benefit when it received approval for a subordinated loan of Rb29.9