FRANKFURT/BERLIN Jan 10 Germany's commercial
banks urged regulators on Friday to quickly clarify whether they
can issue billions of euros in bonds to fulfil new capital
requirements aimed at limiting the damage from future financial
German lenders are still waiting for a green light from
national authorities before issuing the bonds, while foreign
rivals have stolen a march in tapping investors to bolster their
capital safety buffers to meet the tougher international banking
standards known as Basel III.
Among the lenders, Deutsche Bank alone plans to
issue 5 billion euros in bonds by the end of 2015.
"For Germany as a banking centre it is high time that the
authorities create legal certainty regarding additional core
capital," Michael Kemmer, managing director of the BDB banking
association, told Reuters.
"Germany should keep pace with other European states like
France, The Netherlands, Spain or the UK," Kemmer said.
At least three German banks have asked regulators officially
for a clarification, financial sources said.
It remains unclear in Germany whether banks will be allowed
to deduct interest payments on these relatively expensive bonds
from their taxes as a business expense. The banks also want to
know if foreign investors in the bonds would continue to be
exempted from a deduction of tax at source.
There is also the question of whether the bonds would count
as equity capital for tax purposes.
"For the issuing banks as well as for investors, these bonds
are only attractive if they correspond to international tax
standards," Kemmer said.
The Finance Ministry in Berlin said the rules governing the
bonds, known as contingent capital or "CoCo bonds," were the
subject of "discussions" with the Germany's federal states and
the ministry did not want to comment on the possible outcome.
CoCos are bank bonds that share the loss-absorbing
characteristics of equity, as they can be written down or
converted into capital in times of stress.
Banking watchdog Bafin, which is tasked with determining
whether the bonds meet regulatory criteria as additional
capital, declined to comment.
(Reporting by Alexander Huebner and Matthias Sobolewski,
writing by Jonathan Gould; Editing by Elaine Hardcastle)