Bail-In Capital and Contingent Capital

04/12/2011 08:00 a.m. - 10:00 a.m.

Corporate Finance | Capital Markets, New Products, Financial Institutions + Financial Services, Financial Institutions | Europe, and Securities Offerings | Europe

Morrison & Foerster (UK) LLP
One Ropemaker Street
London EC2Y 9AW
United Kingdom

Peter J. Green

Peter J. Green


Lorna O’Neill
+ 44 20 7920 4007

In January, the Basel Committee on Banking Supervision (“BCBS”) announced the minimum requirements to ensure that all regulatory capital instruments are capable of fully absorbing losses at the point a bank becomes non-viable. The instruments must incorporate either a mandatory write-off (principal write down feature), or a mandatory conversion to equity feature, or the bail-in discretion must be incorporated into national law. These criteria are in addition to the criteria for Tier 1 and Tier 2 capital instruments set out in the December 2010 papers. National regulators will have authority to declare a trigger event for these instruments. A few national regulators, including the Swiss, already have provided guidance regarding contingent capital. We have seen a few issuances of contingent capital products in Europe and anticipate additional offerings will be forthcoming. In the coming months, we anticipate additional discussion of “loss absorbent” capital instruments, including contingent capital, as the BCBS continues its discussions on this topic and national regulators provide guidance.

Topics Will Include:

  • Basel III guidance on bail-in capital
  • Interaction with various proposed resolution schemes
  • National guidance on bail-in capital
  • Contingent capital products
    (a discussion of various alternative structures)
  • Market experience
  • Tax considerations, ratings consideration, corporate governance and other considerations relating to contingent capital
  • Investor perspective
  • Competitive issues arising in connection with contingent capital
  • SIFIs and GSIFIs and contingent capital


  • Peter Green
    Partner, Morrison & Foerster (UK) LLP
  • Thomas A. Humphreys
    Partner, Morrison & Foerster LLP
  • Anna T. Pinedo
    Partner, Morrison & Foerster LLP

CPD and CLE credit are pending.

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