Clarifications of the write-down requirements for
Korean banks’ Basel III-compliant bonds are
expected to encourage deals and appeal to investors.
Korean regulators recently clarified that the terms
and conditions of Basel III-compliant bonds from banks in the
jurisdiction. Previously either a management improvement order
(MIO) by the relevant regulators or regulator’s
designation of the financial institution as insolvent would
trigger a write-down.
But recent bond offerings have shown that bonds
will only be written down when an institution is designated
The Korean regulator has taken the position that bonds will
be treated as Basel III-compliant additional tier 1 (AT1) and
tier 2 bonds with tier 1 or tier...