Bail-in

Exercise of resolution powers including bail-in of capital instruments and eligible liabilities

The resolution authorities have the power to decide the placement in resolution and the exercise of the resolution powers at the point at which they determine that:

(a) the institution individually, or the group to which it belongs, as applicable, is failing or likely to fail (on the basis of objective elements), which includes situations where, pursuant to Article 32(4) of the BRRD:

(i) the institution infringes/will in the near future infringe the requirements for continuing authorization in a way that would justify withdrawal of such authorization including, but not limited to, because the institution has incurred/is likely to incur losses depleting all or a significant amount of its own funds;

(ii) the assets of the institution are/will be in a near future less than its liabilities;

(iii) the institution is/will be in a near future unable to pay its debts or other liabilities when they fall due; or

(iv) the institution requires extraordinary public financial support (subject to limited exceptions which apply when, in order to remedy a serious disturbance in the economy of a Member State and preserve financial stability, extraordinary public financial support is provided to solvent institutions, subject to final approval under the European Commission’s State Aid framework).

(b) there is no reasonable prospect that a private action would prevent the failure; and (c) a resolution action is necessary in the public interest.

The powers provided to resolution authorities in the BRRD include write-down/conversion powers to ensure that capital instruments, including additional tier 1 instruments, and bail-inable liabilities (including subordinated debt instruments and senior debt instruments) fully absorb losses in the situations described above (the “Bail-In Tool”). Accordingly, the BRRD contemplates that resolution authorities may require the write-down of such capital instruments and bail-inable liabilities in part or in full on a permanent basis, or convert them in part or in full into common equity tier 1 instruments.

Statutory Write-Down or Conversion

By its acquisition of the Notes, each Noteholder (which, for the purposes of this Condition 16 (Statutory Write-Down or Conversion), includes any current or future holder of a beneficial interest in the Notes) acknowledges, accepts, consents and agrees:

(i) to be bound by the effect of the exercise of the Bail-in or Loss Absorption Power by the Relevant Resolution Authority, which may include and result in any of the following, or some combination thereof:

(1) the reduction of all, or a portion, of the Amounts Due;

(2) the conversion of all, or a portion, of the Amounts Due into shares, other securities or other obligations of the Issuer or another person (and the issue to the Noteholder of such shares, securities or obligations), including by means of an amendment, modification or variation of the terms of the Notes, in which case the Noteholder agrees to accept in lieu of its rights under the Notes any such shares, other securities or other obligations of the Issuer or another person;

(3) the cancellation of the Notes; and/or

(4) the amendment or alteration of the maturity of the Notes or amendment of the amount of interest payable on the Notes, or the date on which the interest becomes payable, including by suspending payment for a temporary period;

(ii) that the terms of the Notes are subject to, and may be varied, if necessary, to give effect to, the exercise of the Bail-in or Loss Absorption Power by the Relevant Resolution Authority.