Bloomberg Law
Jan. 26, 2023, 9:00 AM

DNB’s 1980s Disco Bonds Can’t Count as Tier 2 Capital, EBA Says

Tasos Vossos
Tasos Vossos
Bloomberg News

A closely watched debt instrument issued in the 1980s by what is now DNB Bank ASA cannot be counted as fully-eligible tier 2 capital, Europe’s banking watchdog said, in a potential headache for lenders that have used these super-low-interest products to plug capital holes.

The European Banking Authority said the lender cannot count these perpetual notes, known as discos, as such because of their tax-related terms as well as hard-to-determine treatment in the event of a liquidation.

The EBA made its comments in a letter published Thursday to a law firm representing the Norwegian bank’s bondholders. It said it had ...

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