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– On the necessity of introducing into Polish law the possibility for banks to issue contingent convertible bonds
Kamil Liberadzki
Marcin Liberadzki
Abstract
The new generation of AT1 instruments commonly referred to as contingent convertibles, or CoCos, embed a unique feature of contingent conversion into common equity or mandatory write-down of principal value. This unique feature provides to the CoCo bonds the loss-absorption capacity on a going-concern basis, a regulatory goal that seems not to have been effectively implemented under the pre-crisis legal framework of tier-based capital structures. The use of CoCos for bank recovery and resolution purposes is a vital element of Bank Recovery and Resolution Directive (BRRD) legal framework and is discussed in detail in this article. The main problem stated in the article is that Poland has so far not introduced into its legal regime an instrument enabling issuing AT1 bonds. This may seriously hamper the process of full and consistent implementation of BRRD into Polish law.
Keywords:
contingent convertibles, CoCos, CRR, BRRD, bail-in, Additional Tier 1, AT 1Most read articles by the same author(s)
- Kamil Liberadzki, Marcin Liberadzki, Regulatory aspects of financing banks’ sustainable activities. Green capital instruments , Safe Bank: Vol. 87 No. 2 (2022)
- Kamil Liberadzki, Marcin Liberadzki, Loss absorption by capital instruments RT1 CoCos, Tier 2 and Tier 3 on the grounds of Solvency II and IRRD , Safe Bank: Vol. 90 No. 1 (2023)
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