# StanChart CEO says AT1 bond wipeout has profound impact
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-24
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Standard Chartered CEO warns of global bank regulation
Meta Description: Standard Chartered CEO Bill Winters discusses the impact of Credit Suisse AG's $17 billion bond wipeout on global bank regulations and the moral hazard of
URL: https://financedigest.com/stanchart-ceo-says-at1-bond-wipeout-has-profound-impacthtml

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By Selena Li

HONG KONG (Reuters) -Standard Chartered Chief Executive Bill Winters said on Friday Credit Suisse AG’s $17 billion Additional Tier 1 bonds wipeout had “profound” implications for global bank regulations.

Winters told a financial forum in Hong Kong the U.S. Federal Reserve move to guarantee non-insured deposits was a “moral hazard”.

As part of the deal for UBS Group AG to take over [Credit Suisse, the Swiss regulator determined that Credit Suisse’s AT1 bonds](https://www.financedigest.com/mitsubishi-ufj-to-postpone-at1-bond-issuance-in-credit-suisse-fallout.html "Mitsubishi UFJ to postpone AT1 bond issuance in Credit Suisse fallout") with a notional value of $17 billion would be wiped out, a decision that stunned global credit markets and angered many holders.

I think it had very profound implications for the [regulation of banks](https://www.financedigest.com/exclusive-u-s-regulator-seeks-sale-of-silicon-valley-bank-signature-bank-portfolios-sources.html "Exclusive-U.S. regulator seeks sale of Silicon Valley Bank, Signature Bank portfolios-sources"), and for the way that banks manage themselves,” Winters said.

Apart from [Credit Suisse](https://www.financedigest.com/swiss-franc-grapples-with-safe-haven-identity-crisis-after-credit-suisse.html "Swiss franc grapples with safe-haven identity crisis after Credit Suisse") takeover, two U.S. banks [collapsed](https://www.financedigest.com/swiss-regulator-monitoring-banks-and-insurers-after-svb-collapse.html "Swiss regulator monitoring banks and insurers after SVB collapse") in the past two weeks and America’s biggest lenders agreed to deposit $30 billion in beleaguered First Republic Bank.

Winters said there appeared to be “non-viable [business models remaining](https://www.financedigest.com/iran-open-for-business-but-caution-remains-the-watchword.html "Iran: ‘open for business’ – but caution remains the watchword"), at least in the U.S.”, with other banks that had similar deposit concentrations.

The banking chief said the [move to guarantee non Federal Deposit Insurance](https://www.financedigest.com/vias-cloud-based-solutions-ensure-painless-office-move-for-insurance-body.html "VIA’S CLOUD-BASED SOLUTIONS ENSURE PAINLESS OFFICE MOVE FOR INSURANCE BODY") Corporation-insured deposits was the “most wonderful example of moral hazard that we’ve come across in quite a while.

Following the [banking crisis](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded"), Standard Chartered’s liquidity coverage ratio (LCR), a measure of how much cash-like assets the bank has, is much higher now, Winters said.

The [bank had 147% LCR before the bank failures](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure") and this was “substantially higher now”, Winters said, without disclosing the current level.

The issue isn’t do the [regulator’s have confidence in our solvency](https://www.financedigest.com/how-solvency-ii-transformed-itself-the-fund-industry-and-regulation.html "How Solvency II transformed itself, the fund industry and regulation"). It’s does the [market have confidence in our liquidity?”](https://www.financedigest.com/zero-liquid-discharge-market-estimates-the-market-to-expand-at-8-to-9-cagr-from-2021-to-2031-2.html "Zero Liquid Discharge Market Estimates The Market To Expand At 8 to 9% CAGR From 2021 to 2031")

(Reporting by Selena Li in [Hong Kong; additional reporting by Scott Murdoch in Sydney; Editing by Christian Schmollinger and Stephen Coates)](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years")


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