81,841
edits
Tier 1 capital: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary Tags: Mobile edit Mobile web edit |
Amwelladmin (talk | contribs) No edit summary Tags: Mobile edit Mobile web edit |
||
| Line 98: | Line 98: | ||
A corporation’s shareholders take all the profit and all the losses of the undertaking. You can only work out what those profit and losses are once every other claim on the enterprise has been settled. Those other claims have the feature of being ''debt'' claims. Debtor claims all have defined payoffs; equity claims are, “whatever’s left”. | A corporation’s shareholders take all the profit and all the losses of the undertaking. You can only work out what those profit and losses are once every other claim on the enterprise has been settled. Those other claims have the feature of being ''debt'' claims. Debtor claims all have defined payoffs; equity claims are, “whatever’s left”. | ||
So, when resolving a company that has gone bust, you must deal with AT1 creditors ''before'' you finally settle up with shareholders. You can do this two ways: you can convert the AT1s into shares or, if its terms permit, you can just write them off altogether. Either way, by the time you deal with shareholders, no AT1s are left. A written down AT1 ''has'' been paid in full. The liability was just | So, when resolving a company that has gone bust, you must deal with AT1 creditors ''before'' you finally settle up with shareholders. You can do this two ways: you can convert the AT1s into shares or, if its terms permit, you can just write them off altogether. Either way, by the time you deal with shareholders, no AT1s are left. A written down AT1 ''has'' been paid in full. The liability was just a bagel, ''and hold the lox''. | ||
=== Did the AT1s ''really'' do worse than common equity? === | === Did the AT1s ''really'' do worse than common equity? === | ||