Will 2014 be the year the contingent capital market goes mainstream? Bankers certainly hope so. A recurring phrase among investment bankers who specialise in bank capital is that “the stars are now aligned”, while one banker reckons that the “floodgates” for European issuance will open in mid-February. Some say issuance should touch €35 billion in 2014.

The reason for the optimism is that most of the pieces for a viable additional Tier 1 market are now finally in place. Basel III requirements for more robust bank capital have finally become European Union law via the Capital Requirements Directive and the Capital Requirements Regulation, together known as CRD4. The European Banking Authority has also finalised reporting standards.