Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p9
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 21491–24515

39.         Additional Tier 1 Capital comprises high quality components of capital that satisfy the following essential characteristics:
(a)          provide a permanent and unrestricted commitment of funds;
(b)          are freely available to absorb losses;
(c)          rank behind the claims of depositors and other more senior creditors in the event of winding-up of the issuer; and
(d)          provide for fully discretionary capital distributions.
40.         Additional Tier 1 Capital consists of:
(a)          instruments issued by an ADI that are not included in Common Equity Tier 1 Capital and which meet:
(i)            the criteria for inclusion in Additional Tier 1 Capital set out in Attachment E to this Prudential Standard;
(ii)         for instruments classified as liabilities under Australian Accounting Standards, the loss absorption requirements set out in Attachment F to this Prudential Standard; and
(iii)       the requirements for loss absorption at the point of non-viability set out in Attachment H to this Prudential Standard;
(b)          instruments issued by a fully consolidated subsidiary of the Level 2 group or a fully consolidated holding company that heads a Level 2 group, and held by third parties (calculated in accordance with Attachment C to this Prudential Standard) where:
(i)            the instruments would, if issued by the ADI, meet the criteria in Attachment E to this Prudential Standard;
(ii)         instruments classified as liabilities under Australian Accounting Standards meet the loss absorption requirements set out in Attachment F to this Prudential Standard; and
(iii)       the instruments meet the requirements for loss absorption at the point of non-viability set out in Attachment H to this Prudential Standard; and
(c)          regulatory adjustments applied in the calculation of Additional Tier 1 Capital in accordance with Attachment D to this Prudential Standard.

Tier 2 Capital
41.         Tier 2 Capital includes other components of capital that, to varying degrees, fall short of the quality of Tier 1 Capital but nonetheless contribute to the overall strength of an ADI and its capacity to absorb losses.
42.         Tier 2 Capital consists of:
(a)          instruments issued by the ADI at Level 1 that meet:
(i)            the criteria for inclusion in Tier 2 Capital set out in Attachment G to this Prudential Standard; and
(ii)         the requirements for loss absorption at the point of non-viability set out in Attachment H to this Prudential Standard;
(b)          instruments issued by a fully consolidated subsidiary of the Level 2 group or a fully consolidated holding company that heads a Level 2 group, and held by third parties (calculated in accordance with Attachment C to this Prudential Standard) where:
(i)            the instruments would, if issued by the ADI, meet the criteria in Attachment G to this Prudential Standard;
(ii)         the instruments meet the requirements for loss absorption at the point of non-viability