I agree with just about everything you've said and cannot work out why anyone in their right mind would buy a hybrid at 100% of face value. Whilst the banks may prefer this approach to raising equity I just don't believe it will be up to them in the end though.
If funding becomes more expensive as bondholders become less sanguine about the risks, then earnings come under pressure immediately
Ironically, raising equity is possibly as cheap (for bank equity owners) as its ever going to be.
(20min delay)