Contingent convertible capital

(CoCos.)

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 its terms, contingent convertible capital may be treated by regulators either as Additional Tier 1 (AT1) capital, or as Tier 2 (T2) capital.

The BIS's quarterly report of September 2013 has a useful primer on CoCos.

See also

• Additional Tier 1
• Bank for International Settlements (BIS)
• Capital
• Capital adequacy
• Capital securities
• Contingency
• Contingent
• Hybrid
• PONV
• Primary Loss Absorbing Capital (PLAC)
• Principal write down
• Tier 2