The Minimum “Bail-in” Criteria for Regulatory Capital


Further to the 16 December 2010 publication of the final Basel III rules, as reported in our client alert “Basel III: The (Nearly) Full Picture,” on 13 January 2011 the Basel Committee on Banking Supervision (“BCBS”) announced the minimum requirements to ensure that all regulatory capital instruments are capable of fully absorbing losses at the point a bank becomes non-viable. In its December 2010 papers, BCBS stated that it would be developing more detailed eligibility criteria for contingent capital to address issues of loss absorbency at the point of a bank’s non-viability. Therefore, the minimum requirements set out in the 13 January 2011 paper are additional to the criteria for Tier 1 and Tier 2 capital instruments set out in its December 2010 papers.

BCBS incorporates into the new requirements all of the specific proposals (the “gone-concern” proposals) set out in its consultative document on the matter, which we discussed in our client alert dated 25 August 2010.

Please see full alert below for more information.

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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.

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