Write down or conversion of Additional Tier 1 instruments
Article 54
1. For the purposes of point (n) of Article 52(1), the following provisions shall apply to Additional Tier 1 instruments: (a) a trigger event occurs when the Common Equity Tier 1 capital ratio of the institution referred to in point (a) of Article 92(1) falls below either of the following: (i) 5,125 %; (ii) a level higher than 5,125 %, where determined by the institution and specified in the provisions governing the instrument; (b) institutions may specify in the provisions governing the instrument one or more trigger events in addition to that referred to in point (a); (c) where the provisions governing the instruments require them to be converted into Common Equity Tier 1 instruments upon the occurrence of a trigger event, those provisions shall specify either of the following: (i) the rate of such conversion and a limit on the permitted amount of conversion; (ii) a range within which the instruments will convert into Common Equity Tier 1 instruments; (d) where the provisions governing the instruments require their principal amount to be written down upon the occurrence of a trigger event, the write down shall reduce all the following: (i) the claim of the holder of the instrument in the insolvency or liquidation of the institution; (ii) the amount required to be paid in the event of the call or redemption of the instrument; (iii) the distributions made on the instrument. 2. Write down or conversion of an Additional Tier 1 instrument shall, under the applicable accounting framework, generate items that qualify as Common Equity Tier 1 items. 3. The amount of Additional Tier 1 instruments recognised in Additional Tier 1 items is limited to the minimum amount Common Equity Tier 1 items that would be generated if the principal amount of the Additional Tier 1 instruments were fully written down or converted into Common Equity Tier 1 instruments. 4. The aggregate amount of Additional Tier 1 instruments that is required to be written down or converted upon the occurrence of a trigger event shall be no less than the lower of the following: (a) the amount required to restore fully the Common Equity Tier 1 ratio of the institution to 5,125 %; (b) the full principal amount of the instrument. 5. When a trigger event occurs institutions shall do the following: (a) immediately inform the competent authorities; (b) inform the holders of the Additional Tier 1 instruments; (c) write down the principal amount of the instruments, or convert the instruments into Common Equity Tier 1 instruments without delay, but no later than in one month, in accordance with the requirement laid down in this Article. 6. An institution issuing Additional Tier 1 instruments that convert to Common Equity Tier 1 on the occurrence of a trigger event shall ensure that its authorised share capital is at all times sufficient, for converting all such convertible Additional Tier 1 instruments into shares if a trigger event occurs. All necessary authorisations shall be obtained at the date of issuance of such convertible Additional Tier 1 instruments. The institution shall maintain at all times the necessary prior authorisation to issue the Common Equity Tier 1 instruments into which such Additional Tier 1 instruments would convert upon occurrence of a trigger event. 7. An institution issuing Additional Tier 1 instruments that convert to Common Equity Tier 1 on the occurrence of a trigger event shall ensure that there are no procedural impediments to that conversion by virtue of its incorporation or statutes or contractual arrangements.