UK regulators are concerned that a new form of bonds, widely expected to be launched by banks around the world as a replacement for discredited hybrid securities, risk endangering the stability of financial markets if they are overused.

Senior regulatory figures told the Financial Times that, if misused, the so-called contingent convertible bonds, the first of which were launched by Lloyds Banking Group this week, could prove “unsettling” and would add an “extra dimension of risk” to capital markets.