Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p52
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 134991–137819

parent ADI under this Attachment; or
(ii)         the application of non-viability requirements imposed by a host regulator of the subsidiary or under statute; and
(c)          subject to paragraphs 7 and 8 of this Attachment, where the ADI is a locally-incorporated ADI that is a subsidiary of a foreign bank, notification by the home regulator of the foreign bank to the foreign bank or the ADI that the home regulator considers that:;
(i)            conversion or write-off of capital instruments is necessary because, without it, the foreign bank or the ADI would become non-viable; or
(ii)         without a public sector injection of capital, or equivalent support, the foreign bank or the ADI would become non-viable.
3.             Conversion or write-off of an Additional Tier 1 Capital or Tier 2 Capital instrument must generate an unequivocal addition to the ADI's Level 1 and Level 2 Common Equity Tier 1 Capital under Australian Accounting Standards.
4.             For the purposes of conversion or write-off, in whole or in part, of an Additional Tier 1 Capital or Tier 2 Capital instrument as a result of a non-viability event, the amount to be converted or written off must be the face value of the instrument or relevant part thereof. Dividends and interest associated with the instrument which have been converted or written off, but which are not yet due and payable must also be extinguished.
5.             In order to comply with the immediate conversion or write-off in paragraph 1 to this Attachment, the instrument must be capable of conversion or write-off taking place at any time of day:
(a)          during a business day; or
(b)          on a day that is not a business day.
6.             To qualify as eligible Additional Tier 1 Capital or Tier 2 Capital, an instrument issued by a fully consolidated subsidiary included in the Level 2 group must satisfy the requirements in this Attachment. As a result, a non-viability event applicable to a parent ADI must function as a non-viability event for the subsidiary itself for the instrument if the instrument is to be eligible for inclusion in the capital of the Level 2 group. A fully consolidated subsidiary incorporated overseas may, however, also be subject to non-viability requirements imposed by a host or home regulator or under statute provided that the requirements are disclosed by the regulator, and issue documentation for the instrument discloses that the instrument is subject to potential loss as a result of the requirements. The implementation of such non-viability requirements upon the overseas incorporated subsidiary must not be a non-viability event for instruments issued by the parent ADI under paragraph 1 of this Attachment.
7.             To qualify as eligible Additional Tier 1 Capital or Tier 2 Capital, an instrument