medium · Corporate Credit Analysis cca-core

Which of the following events would most likely trigger a write-down or conversion of the AT1?

1. The bank suffers a catastrophic trading loss that consumes more than 7% of its risk-weighted assets.
2. The bank's senior unsecured rating is downgraded two full notches, from A into the BBB category.
3. The bank fails to call the AT1 instrument at its first call date, leaving it outstanding with a reset coupon rate.
4. The bank's board decides to cancel its common equity dividend this quarter in order to preserve regulatory capital.

Sign up free to see the explanation and track your rank →