BQ Prime
The Curious Case Of Alleged AT-1 Bonds Misselling By HDFC Financial institution
An HDFC Financial institution buyer filed a police criticism alleging that he was missold Credit score Suisse’s AT-1 bonds, main to large losses.
RBI and different regulators sleeping. Very unhappy state
Frankly, the man was offered AT-1 of Normal chartered and Credit score Suisse financial institution by Bahrain department of HDFC financial institution. Unsure why ought to RBI become involved in any respect.That man virtually invested half one million greenback, and now he’s saying he had no concept what he was investing into? That is plain silly. Sooner or later buyers also needs to be answerable for their choice.
No level blaming RBI at all times.
Nobody knew of the danger of AT1 Bonds earlier than the Sure Financial institution fiasco. Everybody glided by the assumption that Banks can not fail, which to a sure extent is true. Nobody of their life, would have thought that AT1 Bonds could possibly be written off while fairness shareholders nonetheless received one thing – Sure Financial institution Saga
After the Sure financial institution saga, everybody turned consultants, now this gents was approached by HDFC in 2021. Sure Financial institution saga befell in 2020. Each information paper had this mis promoting of AT1 bond holders by sure financial institution RM. Was he not conscious of this.
SEBI or RBI then put a restrictions on retail investor in India to spend money on these Bonds. This was information too.
HDFC should have approached him and when the identify of banks have been informed, I empathise, nobody may even suppose that Credit score Suisse or Normal Chartered Financial institution may fail. These have been stable banks.
For the reason that Sure financial institution fiasaco, Indian banks raised Rs 82,370 crore within the calendar 12 months 2022 by way of extra AT1 Bonds.
Institutional buyers ought to have invested in these bonds understanding the dangers. The purpose I’m making an attempt to make is that, Banks proceed to problem these Bonds and buyers proceed to spend money on these bonds.
State Financial institution of India’s board accredited the fund-raising proposal to lift Rs 10,000 crore in FY24 by way of AT1 Bond. Will I make investments I would if given a possibility and if the coupon fee is increased than Financial institution FD.
Therefore now, it’s not proper to say, the investor didn’t know the danger of AT1 Bonds. That is pure dangerous luck at play. I don’t blame the investor as I’d have completed the identical, if the identify was Normal Chartered or CS.