Contingent convertible capital: Difference between revisions
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Contingent convertible capital is made up of hybrid capital securities that, through a conversion mechanism, provide additional capital available to absorb losses when the capital of the issuing institution falls below a certain level. They are generally used by banks in meeting regulatory capital requirements. | Contingent convertible capital is made up of hybrid capital securities that, through a conversion mechanism, provide additional capital available to absorb losses when the capital of the issuing institution falls below a certain level. They are generally used by banks in meeting regulatory capital requirements. | ||
Depending on their terms, contingent convertible capital may be treated by regulators either as Additional Tier 1 (AT1) capital, or as Tier 2 (T2) capital. | |||
"Contingent convertible capital securities" is frequently and conveniently abbreviated to "CoCos". | "Contingent convertible capital securities" is frequently and conveniently abbreviated to "CoCos". | ||
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*[[PONV]] | *[[PONV]] | ||
*[[Principal write down]] | *[[Principal write down]] | ||
*[[Additional Tier 1]] | |||
*[[Tier 2]] | |||
Revision as of 13:23, 10 November 2016
Contingent convertible capital is made up of hybrid capital securities that, through a conversion mechanism, provide additional capital available to absorb losses when the capital of the issuing institution falls below a certain level. They are generally used by banks in meeting regulatory capital requirements.
Depending on their terms, contingent convertible capital may be treated by regulators either as Additional Tier 1 (AT1) capital, or as Tier 2 (T2) capital.
"Contingent convertible capital securities" is frequently and conveniently abbreviated to "CoCos".
The BIS's quarterly report of September 2013 has a useful primer on CoCos.
