UPDATE 2-Credit Suisse may issue up to $30 bln in coco bonds-FT
* CEO: Considering coco issues over several years-FT
* CEO: Issue would be to show debt demand exists-FT
* UK Lloyds, Dutch-based Rabobank have already issued cocos (Adds background on Swiss banks' capital requirements)
TOKYO, Dec 13 (Reuters) - Credit Suisse may issue up to $30 billion in contingent-capital bonds over the next several years to help shore up the firm's finances ahead of the start of new bank rules, the Financial Times reported on Monday.
The FT quoted Credit Suisse Chief Executive Brady Dougan as saying in an interview the company aims to issue the so-called coco bonds soon to assure investors and regulators there is enough demand for its debt.
Cocos, bonds that convert into equity under certain conditions -- usually when a bank's store of capital falls below a certain trigger point -- have got a boost after Swiss regulators said the bonds could help bolster capital bases for banks. [ID:nLDE6930O4] Switzerland announced in October its two biggest lenders -- Credit Suisse and UBS -- would be subject to tougher capital rules than the internationally-agreed Basel III framework. [ID:nLDE6931X1] Plans laid out by a Swiss government commission said both banks should hold a total of 19 percent of risk-weighted assets. The first 10 percent of their capital holdings must be in the form of common equity, but the commission said the next 9 percent could be in the form of coco bonds.
This initiative marked a step forward for the asset class, which has seen UK bank Lloyds and Dutch-based Rabobank issue the bonds in November 2009 and March this year. [ID:nLK695084] [ID:nLDE62B0ES]
The Basel Committee on Banking Supervision is looking into the use of coco bonds as a means of additional loss absorbency for large banks and is due to report on this early next year.
Last week, rating agency Standard & Poors said banks around the world may need to raise up to $1 trillion in contingent capital in the next decade to replace existing debt and bolster balance sheets. [ID: nLDE6B81CR]. (Reporting by James Topham and Rachel Armstrong; Editing by Chris Gallagher and Anshuman Daga) (If you have a query or comment on this story, send an email to firstname.lastname@example.org))
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