Banks remodel issuance structures to combat TLAC

New subsidiaries set to dodge structured note issuance limitations

Structured note issuers are having to get creative in anticipation of final TLAC rules

A number of the largest dealers in the US structured products market are understood to be in the process of setting up new finance company subsidiaries – a move designed in large part to help them continue selling structured notes in significant volume after the imposition of new capital rules that will severely restrict issuance of the products at the bank holding company level.

A draft Federal Reserve rule published in October 2015 largely renders structured notes ineligible to fill total loss

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