Using contingent capital as a preventative tool does not foreclose the statutory core power or the debt write-down tool within resolution; if early contractual write-down and conversion fail, authorities remain free to intervene and impose a haircut on shareholders, debt investors and other private parties.
Source quote, verbatim
Contingent capital as a preventative tool would not impede the statutory core power or debt write-down tool of bail-inables within resolution.
From
Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012), VI. CONTINGENT CAPITAL AS A PREVENTATIVE TOOL IN EUROPEAN UNION BANK RESTRUCTURING, p. 71 https://ssrn.com/abstract=2061166 · source PDF
Cite as
Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166
Holds when
contractual conversion at an early stage that does not achieve the desired result
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