Americas Wholesale Banking Growth and M&A Advisory
Summary of Bail-in / TLAC Regime
Best in class approach
.
•
Scope
Scope of bail-in
instruments
Liabilities excluded
from bail-in
TLAC compliance date
TLAC requirement
TLAC eligibility
Grandfathering
Sequencing and
preconditions
Form of bail-in
DSIB disclosure
requirements
OSFI designated DSIBS
Senior unsecured debt that is tradeable and transferable, original term >400 days, unsecured and issued, originated
or renegotiated after September 23, 2018
Insured deposits, uninsured deposits, debt with original term < 400 days, ABS / covered bonds, structured notes²,
derivative liabilities, other liabilities
November 1, 2021
22.5% minimum risk-based TLAC ratio (21.5% plus a 1.0% Domestic Stability Buffer)
6.75% minimum TLAC leverage ratio
Regulatory capital³ + bail-in debt with remaining term to maturity > 1 year4
Yes - all senior instruments issued prior to September 23, 2018
1. Federal authorities bring bank into resolution
2. Full conversion of bank's NVCC instruments must occur prior to or concurrently with bail-in
Equity conversion
- Include disclosure related to the conversion power in any agreement governing an eligible liability as well as any
accompanying offering document
- Include a clause in the contractual provisions governing any eligible liability through which investors provide express
submission to the Canadian bail-in regime
- Provide disclosure of TLAC ratios beginning Q1 2019
Bail-in is not the only path in Canada to resolve a failing bank. Canadian authorities retain full discretion
to use other powers including "vesting order", "receivership order", "bridge bank resolution order", etc.
Equity conversion under the Canadian bail-in regime has the potential to result in realizable value in
excess of principal amount
1Yankee CD's with original term > 400 days are in-scope of bail-in
2 As per definition of structured notes in section 2(6) of the Bank Recapitalization (Bail-in) Conversion Regulations under the CDIC Act
3 Adjusted to fully include subordinated debentures with a remaining term of one to five years
4 Provided such bail-in debt meets certain other requirements
70
10View entire presentation