The confusing thing about bank hybrid securities – which live in the grey area between debt and equity – is that they pit the interests of two regulators directly against each other.

The Australian Prudential Regulation Authority cares only about the sanctity of customer deposits and the overall stability of the financial system. The easier it is to inflict pain on the hybrid holder to better lift a bank’s capital, the happier the prudential regulator is. This, however, comes at a cost of investor protection, which would be the remit of the Australian Securities and Investments Commission.