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  • Write Down or Conversion of Additional Tier 1 Instruments

    • CA-2.1.7D

      For the purposes of Subparagraph CA-2.1.6(o), the following provisions apply to AT1 instruments accounted for as liabilities:

      (a) A trigger event occurs when the CET1 capital ratio of the conventional bank licensee institution referred to in Subparagraph CA-B.2.1(a) falls below either of the following:
      (i) 7.0%;
      (ii) A level higher than 7.0 %, where determined by the conventional bank licensee and specified in the provisions governing the instrument; and
      (b) Conventional bank licensees may specify in the provisions governing the instrument one or more trigger events in addition to that referred to in Subparagraph (a).
      January 2015

    • CA-2.1.7E

      Where the provisions governing AT1 instruments require them to be converted into CET1 instruments upon the occurrence of a trigger event, those provisions must specify either of the following:

      (a) The rate of such conversion and a limit on the permitted amount of conversion; or
      (b) A range within which the instruments will convert into CET1 instruments.
      January 2015

    • CA-2.1.7F

      Where the provisions governing AT1 instruments require their principal amount to be written down upon the occurrence of a trigger event, the write down must reduce all the following:

      (a)The claim of the holder of the instrument in the insolvency or liquidation of the conventional bank licensee;
      (b)The amount required to be paid in the event of the call or redemption of the instrument; and
      (c)The distributions made on the instrument.
      January 2015

    • CA-2.1.7G

      Write down or conversion of an AT1 instrument must, under the applicable accounting framework, generate items that qualify as CET1 items.

      January 2015

    • CA-2.1.7H

      The amount of AT1 instruments recognised in AT1 items is limited to the minimum amount of CET1 items that would be generated if the principal amount of the AT1 instruments were fully written down or converted into CET1 instruments.

      January 2015

    • CA-2.1.7I

      The aggregate amount of AT1 instruments that is required to be written down or converted upon the occurrence of a trigger event must be no less than the lower of the following:

      (a)The amount required to restore fully the CET1 ratio of the conventional bank licensee to 7.0 %; and
      (b)The full principal amount of the instrument.
      January 2015

    • CA-2.1.7J

      When a trigger event occurs conventional bank licensees must do the following:

      (a) Immediately inform the CBB;
      (b) Inform the holders of the AT1 instruments; and
      (c) Write down the principal amount of the AT1 instruments, or convert the instruments into CET1 instruments without delay, but no later than within one month, in accordance with the requirement laid down in this Section.
      January 2015

    • CA-2.1.7K

      A conventional bank licensee issuing AT1 instruments that convert to CET1 on the occurrence of a trigger event must ensure that its authorised share capital is at all times sufficient, for converting all such convertible AT1 instruments into shares if a trigger event occurs.

      January 2015

    • CA-2.1.7L

      All necessary authorisations must be obtained at the date of issuance of such convertible AT1 instruments. The conventional bank licensee must maintain at all times the necessary prior authorisation from the CBB to issue the CET1 instruments into which such AT1 instruments would convert upon occurrence of a trigger event.

      January 2015

    • CA-2.1.7M

      A conventional bank licensee issuing AT1 instruments that convert to CET1 on the occurrence of a trigger event must ensure that there are no procedural impediments to that conversion by virtue of its incorporation or statutes or contractual arrangements.

      January 2015