Document ID: chunk:federal_register_of_legislation:F2024L01525:body:0:p32
Version: federal_register_of_legislation:F2024L01525
Segment Type: other
Provision Reference: 
Character Range: 86026–88935

following events:
 1.             the exercise or non-exercise of discretions within the debt instrument or other capital instrument;
 2.          an adverse event or change, however so described or determined, occurring in respect of the debt instrument or other capital instrument; and
 3.        any consequence arising from, or any action taken or intended to prevent,[39] the above events or a default by the issuer under the debt instrument or other capital instrument,
    but does not include a clause specifying the irrevocable winding-up (that is, either by way of effective resolution by shareholders or members for winding-up, or a court order has been made, and the time for appeal of the decision has passed) of the issuer.
 1.          Issue documentation must clearly and prominently state:
         1.           the maturity date of the instrument at which time the issuer is required to redeem the instrument;
         2.           the unsecured and subordinated nature of the instrument, and that neither the issuer nor the holder of the instrument is allowed to exercise any contractual rights of set-off;
         3.           the instrument is not subject to netting;
         4.           that the issuer cannot buy back, purchase or redeem the instrument other than in the terms permitted under this Prudential Standard;
         5.           the application of requirements relating to loss absorption at the point of non-viability under Attachment E to this Prudential Standard.
 2.          The amount of an instrument eligible for inclusion in Tier 2 Capital is to be amortised on a straight-line basis at a rate of 20 per cent per annum over the last four years to maturity as follows:
Years to maturity                          Amount eligible for inclusion in Tier 2 Capital
More than 4                                100 per cent
Less than and including 4 but more than 3  80 per cent
Less than and including 3 but more than 2  60 per cent
Less than and including 2 but more than 1  40 per cent
Less than and including 1                  20 per cent

 1.          For the purposes of paragraph 8 of this Attachment, an incentive or expectation to call or otherwise redeem a Tier 2 Capital instrument includes, but is not limited to:
         1.           a call option combined with a requirement, or an investor option, to convert the instrument into ordinary shares if the call is not exercised;
         2.           a call option combined with a change in reference rate where the credit spread over the second reference rate is greater than the initial payment rate less the swap rate (i.e. the fixed rate paid to the call date to receive the second reference rate);
         3.           a call option combined with an increase in the redemption amount in the future;
         4.           automatic redemption or an option to redeem following a change of control event;