kaal:claim:2061166-034

A second, sequential trigger placed before reorganization or resolution cushions the risk that policy makers misstructure the first trigger, absorbing the negative effects of inadequate or untimely conversion at the moment the institution needs capital.

Given the risk that policy makers may not structure the trigger appropriately, the negative effects of inadequate or untimely conversion of debt into equity at a time when the company requires a capital injection could be cushioned with a second trigger

Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012), C. Dual Triggers in Going and Gone Concern, p. 68
https://ssrn.com/abstract=2061166 · source PDF

Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166

• contingent capital with sequential triggers spanning going and gone concern
• where the first trigger proves unsuccessful

designsupport: arguedcontingent-capitalsystemic-riskgovernance-design

• extends kaal:claim:1908473-006 The second trigger, which increases voting rights before resolution, should fire on evidence that conversion i...
• extends kaal:claim:1908473-005 Because policymakers may adopt a suboptimal single trigger design, and because contingent capital has uses at ...
• extends kaal:claim:1908473-007 Beyond super-voting rights and dilution, the second trigger functions as a reorganization tool that operates i...
• extends kaal:claim:1908473-030 The second trigger voting rights increase should never actually be triggered; its function is to level the pla...
• extends kaal:claim:1998455-013 Converting contingent capital securities too late makes the capital injection superfluous, because by that sta...

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