AI Summary of Article 53 Restrictions on the cancellation of distributions on Additional Tier 1 instruments and features that could hinder the recapitalisation of the institution
This section clarifies key provisions regarding Additional Tier 1 (AT1) instruments under Article 52(1). Notably, it stipulates that AT1 instruments should not mandate distributions when there are concurrent distributions on instruments of equal or lower ranking, including Common Equity Tier 1 (CET1) instruments.
Additionally, there shall be no requirement to cancel distributions on CET1, AT1, or Tier 2 instruments if distributions are not made on AT1. Importantly, institutions are not obliged to substitute interest or dividend payments with alternative forms, thereby ensuring flexibility in financial management.
Article 53 Restrictions on the cancellation of distributions on Additional Tier 1 instruments and features that could hinder the recapitalisation of the institution
For the purposes of points (l)(v) and (o) of Article 52(1), the provisions governing Additional Tier 1 instruments shall, in particular, not include the following:
(a) a requirement for distributions on the instruments to be made in the event of a distribution being made on an instrument issued by the institution that ranks to the same degree as, or more junior than, an Additional Tier 1 instrument, including a Common Equity Tier 1 instrument;
(b) a requirement for the payment of distributions on Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments to be cancelled in the event that distributions are not made on those Additional Tier 1 instruments;
(c) an obligation to substitute the payment of interest or dividend by a payment in any other form. The institution shall not otherwise be subject to such an obligation.