Section 6B(2)

“The mandatory reduction provision” is provision which produces the following results— existing Common Equity Tier 1 instruments of the bank are cancelled, transferred or diluted in accordance with the principle that losses should be borne first by the holders of such instruments, the principal amount of Additional Tier 1 instruments of the bank is reduced or such instruments are converted (directly or indirectly) into Common Equity Tier 1 instruments (or both)— whichever is lower; ... to the extent required to achieve the special resolution objectives set out in section 4, or to the extent of the capacity of the relevant capital instruments, the principal amount of Tier 2 instruments of the bank is reduced or Tier 2 instruments are converted (directly or indirectly) into Common Equity Tier 1 instruments (or both)— whichever is lower; and to the extent required to achieve the special resolution objectives set out in section 4 (so far as not achieved under paragraph (b)), or to the extent of the capacity of the relevant capital instruments, where this section applies by virtue of section 6A(3) (Case 2) and the bank is not a resolution entity, but is in a resolution group, the principal amount of the relevant internal liabilities is reduced or such liabilities are converted (directly or indirectly) into Common Equity Tier 1 instruments (or both)— whichever is lower. to the extent required to achieve the special resolution objectives set out in section 4 (so far as not achieved under paragraphs (b) and (c)), or to the extent of the capacity of such liabilities,

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Source: legislation.gov.uk · retrieved 2026-09-04