Recent Development in Tier 1 Hybrids

more+
less-

Last week we were informed by the staff at the Board of Governors of the Federal Reserve System (the “Fed”) that they had recently approved a new variation on the

WITS structure for Tier 1 bank holding company capital. WITS typically involve the issuance of securities by a trust that evidence a beneficial interest in: (i) a forward stock purchase contract by a trust to purchase noncumulative perpetual preferred stock of the bank holding company issuer; and the (ii) purchase by the trust of long dated junior subordinated notes of the issuer. The trust would remarket the junior subordinated notes at the forward stock purchase date for the perpetual preferred stock in order to obtain funds to fulfill the forward purchase agreement. If the junior subordinated notes could not be remarketed, they would be delivered to the issuer to satisfy the requirement to purchase the noncumulative perpetual preferred stock. Once issued, subject to Fed

approval, the noncumulative perpetual preferred stock could be redeemed and replaced with another comparable capital instrument.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:

more+
less-

Morrison & Foerster LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×