This will bring the total common equity that banks are required to hold to 7%.
The company also said returns on tangible common equity during the quarter were disappointing.
In these restructurings, in the hierarchy of the world of corporate finance, common equity is actually a lower-quality asset.
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They own preferred shares in many banks, common equity in others and stand ready to inject capital in others still.
At present this cushion against misfortune is provided by common equity, hence such contracts would become a partial substitute for equity.
In 1987 and 1989 FORBES quoted you as saying it was time to deleverage, to get out of debt, to sell common equity.
Wells Fargo, for instance, has more money in second liens than it has tangible common equity, or the most solid form of capital.
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Lehman's exposure to mortgage- and asset-backed securities and collateralized debt obligations is 400% of its tangible common equity, according to research by Sanford Bernstein.
From a text book perspective, Basel III requires banks to hold 4.5% of common equity, Basel II requires 6% of Tier I capital of risk-weighted assets.
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It also owns a 41% common equity interest in PS Business Parks ( PSB), which owns and operates commercial space, primarily flex, multi-tenant office and industrial space.
The amount of common equity - the best capital for absorbing losses - that banks have to hold will rise from 2% of their loans and investments to 7%.
It also owns a 41% common equity interest in PS Business Parks Inc. ( PSB), which owns and operates commercial space, primarily flex, multi-tenant office and industrial space.
Moreover, the convoluted method of determining what common equity is reinforces the belief that no one really knows, or can calculate, what capital is by looking at a bank statement.
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The Basel Committee on Banking Supervision, which includes representatives from 27 countries, now wants banks to hold 4.5% common equity against assets plus another 2.5% buffer, for a total of 7%.
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Those goals are expected to be similar to ones outlined in a new executive compensation plan that grades performance based on return on assets and tangible common equity, the people said.
Although the company has grown its oil and gas production and operating cash flow, it has taken a lot of new debt and common equity raising to accomplish these growth objectives.
"With its high leverage ratio to tangible common equity, we believe Lehman needs to raise substantial capital regardless of market conditions in order to take its needed write-downs, " Einhorn said in an email Tuesday.
The new rules state that the amount of common equity - the best capital for absorbing losses - that banks have to hold will rise from 2% of their loans and investments to 7%.
Debt amounts to less than 2% of common equity at Mid Atlantic Medical Services (nyse: MME - news - people), a managed health care operator which also offers insurance services to the Mid-Atlantic region.
In order to support high levels of wholesale funding, UBS says, banks may need to demonstrate levels of core Tier one capital, which is effectively common equity, well in excess of the levels most Eurozone banks currently hold.
As part of the package of new standards, banks will be required to increase their minimum common equity requirement from 2% to 4.5%, and will additionally have to hold a capital conservation buffer of 2.5%, "to withstand future periods of stress, " the Basel Committee said in a press release.
The North American Distressed Debt Market Outlook 2011, a survey of 100 experienced distressed debt investors released by Debtwire, Macquarie Capital and Bingham McCutchen, found that these investors will move their cash from energy to real estate assets and from first and second-lien loans to common equity and convertible bonds.
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In stress test results released last Thursday, Citigroup and Fifth Third Bancorp were projected by the Fed to have Tier 1 common equity ratios in excess of 8.0% in a stressed economic scenario of a deep recession, 12%-plus unemployment, a 20% slump in housing prices, and a 52% drop in U.S. stock markets.
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If a government recapitalisation does prove necessary, the treasury is likely to take one of two routes: a preferred-stock investment that allows the agencies to raise more capital of their own, or nationalisation through a common-equity injection that leaves current owners with nothing, and thus offers the taxpayer a better deal.
Equity securities such as warrants, preferred stock, common stock and other equity interests, will principally be made in conjunction with debt investments.
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Ernst looks at net income before extraordinary items divided by the sum of common and preferred equity and long-term debt.
As far as trying to do an initial public offering (IPO) of common stock to raise equity capital, forget it.
In recent months, equity withdrawal, common in the last housing boom, has returned.
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