AI Summary of Article 54 Write down or conversion of Additional Tier 1 instruments
The provisions outlined in Article 52(1) establish crucial regulations for Additional Tier 1 (AT1) instruments, particularly regarding trigger events. A trigger event is defined as when an institution's Common Equity Tier 1 (CET1) capital ratio falls below 5.125% or a higher level specified by the institution. Institutions must ensure clear governing provisions for the conversion or write-down of AT1 instruments and must notify competent authorities and instrument holders without delay once a trigger event occurs.
Moreover, to facilitate conversion upon a trigger event, institutions must secure adequate authorised share capital and ensure no procedural barriers exist in their governing statutes. Compliance with these stipulations is key to maintaining robust capital measures and regulatory alignment.
Article 54 Write down or conversion of Additional Tier 1 instruments
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: