The move raised fears about Deutsche's capital strength and signalled a much higher likelihood that other banks would follow the example in not repaying so-called hybrid-capital bonds.
This could in turn erode the market for hybrid capital deals, which are supposed to occupy a kind of grey area between debt and equity. These instruments have been hugely important in squeezing extra funding into bank balance sheets – and in propping them up since the financial crisis exploded.
The bonds are typically repaid at the first opportunity after an initial period when redemptions are not allowed. If an issuer does not redeem then, they must pay a higher penalty coupon rate.
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