Credit Suisse set for new bank rules with £19bn bond sale

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The bank's chief executive Brady Dougan told the Financial Times the company aimed 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 they could help bolster capital bases for banks.

Switzerland announced in October that its two biggest lenders — Credit Suisse and UBS — would be subject to tougher capital rules than the international Basel III framework.

Plans laid out by a Swiss government commission said both banks should hold a total of 19% of risk-weighted assets. The first 10% of their capital holdings must be in the form of common equity, but the commission said the next 9% could be in the form of coco bonds.

This initiative marked a step forward for the asset class, which has seen Lloyds and Dutch bank Rabobank issue the bonds in March and November last year.

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.