Bundesbank Pitches Phase-in To Salvage Banks’ AT1 Debt Overhaul

The Bundesbank is proposing giving European banks more than five years to overhaul how they use additional Tier 1 debt, as it seeks to salvage a controversial proposal to streamline banks’ capital structure.

“To get to that ideal world we described, you need a transitional period,” Executive Board member Michael Theurer said in an interview. “It would need to be more than five years, given a change like this. You have to calibrate the capital requirements in a way that there is no additional need for capital in the system.”