Loss absorbing capacity

(LAC).

In the field of bank resolution and recovery, loss absorbing capacity is the ability of a bank to suffer losses without falling below regulatory minima of capital and requiring re-capitalisation or resolution.

LAC may take the form of equity, subordinated debt, senior unsecured debt, and other unsecured uninsured liabilities.

See also

• PLAC primary loss absorbing capacity

• SLAC secondary loss absorbing capacity

• GCLAC or GLAC gone-concern loss absorbing capacity

• MREL minimum requirement for own funds and eligible liabilities
• MCT