Federal Government Introduces Bail-In Legislation: Bill C-15

On April 20, 2016, the Canadian federal government introduced Bill C-15, which is legislation that provides for, among other things, a bank recapitalization or "bail-in" regime for domestic systemically important banks ("D-SIBs").

BAIL-IN

For those unfamiliar with this feature of financial services regulatory reform, the basic concept of bail-in is that certain stakeholders of a bank that finds itself in the remote circumstance of being in severe distress will be required to support the viability of such a bank by mandatory conversion of their respective instruments into the common equity of the bank. This mandatory conversion would occur upon a regulatory determination that triggering such conversions will absorb losses and that, together with such other measures as regulators may determine to be necessary, such conversions will be sufficient to re-establish the viability of such a bank. This legislative mechanic is intended to avoid (or minimize) the likelihood