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Bond Market News
Germany Goes Back Against Push to Exclude AT1s as Going-Concern Capital
May 11, 2026
Germany’s Bundesbank and financial regulator BaFin had last year proposed a sweeping simplification of bank capital rules that would have stripped AT1 bonds of their role in banks’ going-concern capital. The proposal drew sharp industry pushback, amid AT1s forming a critical part of bank capital, given that they rely on them as a cost-efficient alternative to issuing equity. The Bundesbank has now softened its stance, signalling openness to a compromise that preserves AT1’s going-concern role. It also plans to explore ways to strengthen and simplify the instrument rather than phase it out. Analysts noted the retreat signals that AT1s are likely to remain a durable feature of European bank capital structures.
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