Tax Appeal of Hybrid Capital Instruments in Italy through Tremonti Bonds and Basel III Anticipations

While the EU Commission has been promoting the harmonization of the banking regulatory capital requirements across Member States in general and, in particular, of the criteria for the inclusion of hybrid capital instruments in the determination of the regulatory minimum capital, the recent financial markets disruption has caused an international consensus towards an improvement of the resilience of the banking sector. The outlook on the possible amendments to Tier 1 capital requirements seriously undermines the future ability of Italian banks to issue Tier 1 instruments in a tax efficient manner.