Case | HBS Case Collection | January 2014

Barclays Bank and Contingent Capital Notes, 2012

by Lucy White and Trent Kim

Abstract

In 2012, regulatory changes following the financial crisis mean that Barclays Bank is faced with the need to raise large amounts of capital in order to comply with increased capital requirements, tightening rules as to the "quality of capital," and increased risk weights for its capital markets assets. The bank is contemplating offering contingent capital bonds, which would act like debt during "normal times" but would convert to create capital should the bank hit a "triggering event." How should these instruments be designed? Can they be attractive for the bank and for investors?

Keywords: Financial Instruments; Investment Banking; Capital; Banking Industry;

Citation:

White, Lucy, and Trent Kim. "Barclays Bank and Contingent Capital Notes, 2012." Harvard Business School Case 214-063, January 2014.