Capital components and eligibility criteria for tier 1 and tier 2 capital instruments.

CFR · 2024-01-01 · US · Title 12

(a) (1) CET1 capital; (2) AT1 capital; and (3) Tier 2 capital. (b) (1) Any common cooperative equity instrument issued by a System institution that meets all of the following criteria: (i) The instrument is paid-in, issued directly by the System institution, and represents the most subordinated claim in a receivership, insolvency, liquidation, or similar proceeding of the System institution; (ii) The holder of the instrument is entitled to a claim on the residual assets of the System institution after all senior claims have been satisfied in a (iii) The instrument has no maturity date, can be redeemed only at the discretion of the System institution and with the prior approval of FCA, and does not contain any term or feature that creates an incentive to redeem; (iv) The System institution did not create, through any action or communication, an expectation that it will buy back, cancel, redeem, or revolve the instrument, and the instrument does not include any term or feature that might give rise to such an expectation, except that the establishment of a revolvement period of 7 years or more, or the practice of redeeming or revolving the instrument no less than 7 years after issuance or allocation, will not be considered to create such an expectation; (v) Any cash dividend payments on the instrument are paid out of the System institution's net income or unallocated retained earnings, and are not subject to a limit imposed by the contractual terms governing the instrument; (vi)

official document · source cfr-2024 · id 12:§ 628.20