Definition of trups

Trups stands for trust preferred securities – a hybrid of debt and equity.

Trups -  equity instruments that pay interest like bonds - became popular in the financial crisis when banks sold more than $40bn-worth to investors ranging from Warren Buffett to small savers. Financial groups are interested in buying back the securities because Trups are an expensive form of capital. US banks needed to offer high interest rates to entice investors.

US banks have an extra incentive to redeem Trups because the  law states that they will no longer count as tier one capital – a key gauge of financial strength – from 2013. [1]

FT Articles & Analysis

Related Terms

Discussion