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ARTICLE · 17 JANUARY 2011

Basel Committee Requires Non-Common Capital Instruments to Be Convertible into Common Shares

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Earlier today, the Basel Committee released new minimum requirements specifying that all capital instruments issued on or after January 1, 2013 must contain provisions that require them to be converted into common shares if the relevant regulator determines that the bank is no longer viable.

CanadaFinance and Banking
Blair Keefe
Blair Keefe
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Earlier today, the Basel Committee released new minimum requirements specifying that all capital instruments issued on or after January 1, 2013 must contain provisions that require them to be converted into common shares if the relevant regulator determines that the bank is no longer viable. These requirements were endorsed by the Governors and Heads of Supervision at its January 10, 2011 meeting and are in addition to the criteria detailed in the Basel III capital rules text that were published in December 2010.

All existing non-common capital instruments outstanding on January 1, 2013 will be considered instruments that no longer qualify as additional tier 1 or tier 2 capital and will be phased out in accordance with the Basel rule text released on December 16 and described in our December 2010 bulletin.

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