LONDON, Oct 4 (Reuters) - Contingent capital and other forms of hybrid capital failed to work during the financial crisis and don't represent a "silver bullet", Bank of Spain head of financial regulation, Jose Maria Roldan, said on Monday.
"My question here is why do we think financial innovation will work now in the area of hybrid capital instruments when it did not work last time round," Roldan told a financial regulation conference.
"I am extremely sceptical that in the area of hybrid capital instruments we are going to find any silver bullet," Roldan said. "Preference shares and subordinated debt also looked like good ideas before the crisis but they have been totally useless."
Switzerland on Monday set out a tougher regime for its two biggest banks, UBS and Credit Suisse, which includes a large buffer of capital that could include contingent capital or CoCos.
They are hybrid bonds which backers of the idea say can be turned into equity in times of market turmoil to top up a bank's capital.