Fixed Income Analysis /

Bank & Insurance Watch - EBA advocates “green asset ratio” for European banks (April 2021)

    Michael Teig
    Michael Teig

    Deputy Head of Financials Credit Research

    Natalie Tehrani Monfared
    Tobias Keller
    13 April 2021
    Published by
    • In this edition of our Bank & Insurance Watch (BIW), we provide a comprehensive overview of the latest regulatory developments. Most importantly, the EBA has published its advice underlining the importance of the “green asset ratio” (GAR), supported by other key performance indicators (KPIs), as a key means of understanding how institutions financing sustainable activities and meet the Paris Climate Agreement’s objectives.
    • Primary market: Total March issuance volume in the iBoxx Financials segment amounted to EUR 20.2bn compared to EUR 3.5bn in March 2020, with various issuers filling up their TLAC/MREL and capital stacks. The issuance of environmental, social and governance (ESG) bonds continued to show strong momentum.
    • Secondary market: Despite the slower-than-expected vaccination rollout and extended or new lockdown measures in various European countries, spreads of bank bonds continued to tighten in March, especially those of deep subordinated notes. We remain overall constructive on bank credit.