In view of the recent resolution of the UK branch of the Silicon Valley Bank and the complete write-down of its Additional Tier 1 (AT1) and Tier 2 instruments (T2), the Prudential Regulation Authority, PRA, has published a press statement. Therein, the Authority clarifies the creditor hierarchy in case of bank resolutions which provides that AT1 instruments, e.g. contingent convertible bonds or CoCos, rank ahead of Common Equity Tier 1 capital, and behind T2 capital including subordinated debt or preferred stock.
Additionally, the Authority once again emphasizes that the UK banking system is „well capitalized“ and „remains safe and sound“.
Other Features
banks
bonds
CoCos
financial stability
liquidation
shareholders
wind-down
Date Published: 2023-03-20
Regulatory Framework: Banking Act 2009
Regulatory Type: information
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