Regulatory Alerts2017-08-17
South African Reserve Bank Guidance Note 6/2017: Loss absorbency requirements for Additional Tier 1 and Tier 2 capital
The South African Reserve Bank issued Guidance Note 6/2017 to specify loss absorbency requirements and trigger events for Additional Tier 1 and Tier 2 capital instruments under the Banks Act. The document mandates that these instruments must be converted to equity or written off at the Registrar's discretion or when a bank's Common Equity Tier 1 ratio falls to 5.875 percent. It further details conversion pricing mechanisms, write-off permanence, and the interaction between existing contractual terms and upcoming statutory recovery and resolution legislation.
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