from google search: What is included in cet1? CET1 represents the bank's core capital. It includes ordinary shares, retained earnings, stock surpluses from the issue of common shares and common shares held by the subsidiaries of the company. NOW do you understand why jps converts?
The junior-to-common conversion has nothing to do with liquidity. Instead, it boils down to two main things:
1) It increases CET1 capital by the par value of the juniors converted. If all of them convert, that's $33B, a significant chunk of what FnF need ($76B CET1 requirement plus $99B PCBBA buffer). 2) It clears $33B of liquidation preference and $2B of dividend preference from in front of the re-IPO commons. It is quite possible, and likely in my opinion, that said re-IPO investors will insist on the existing juniors being converted to commons.
Check page 15 of the capital rule fact sheet. It shows that counts towards CET1. Namely, common equity, some types of AOCI (which are a rounding error for FnF), and retained earnings.
Don't ask me, ask Mark Calabria. He's the one that has a separate CET1 capital requirement, which counts common equity but not preferred equity.
No, this is completely wrong. The amount of CET1 capital has nothing to do with the market value of the commons.
Again, completely wrong. A junior-to-common conversion both directly adds to CET1 capital and makes the re-IPO easier.
In addition, there is no reason not to do it. The conversion is completely legal and advances the recap/release agenda.