Dutch banks have missed out on millions of euros that could help buttress their finances by not buying CoCo bonds, the Financieele Dagblad reports on Tuesday.

With CoCo bonds – contingent convertibles – the likelihood of the bonds converting to equity is ‘contingent’ on a specified event, such as the stock price of the company exceeding a particular level for a particular period of time.

They have an accounting advantage because, unlike other convertible bonds, they do not have to be included in a company’s diluted earnings per share until the bonds are eligible for conversion.

It is also a form of capital that regulators hope could help buttress a bank’s capital in times of stress.

Tax office

Despite the hype this summer around CoCos, Dutch banks have not been able to take advantage, the FD says.

The banking sector says this is the fault of the tax authorities. The interest on CoCos is not deductible in the Netherlands, unlike in the rest of Europe.

Junior finance minister Eric Wiebes told parliament in April that there is ‘an uneven playing field between Dutch banks and the rest of Europe’, and promised a draft bill to change the situation.

Five months later, nothing has been done and the finance ministry cannot say when the bill will reach parliament, the FD says.

In the meantime, the hype around CoCos is diminishing and the Dutch banks have missed out on millions of euros which would have helped them with their buffers, the paper says.