C
Convertible Capital Note or Security
C
Convertible Capital Note or Security
A fixed term debt instrument or preferred stock issued by a bank and convertible into perpetual preferred stock. In some issues,
conversion
to preferred may be encouraged or forced by the
issuer
who may have the
right
to reduce the note
coupons
or simply to effect conversion. The perpetual preferred stock becomes Tier I bank capital under the Basle
Capital Adequacy Directive
. These notes are used primarily to assure a bank access to additional capital in an emergency. Also called
Exchangeable Capital Security (X-Cap)
,
Exchangeable Capital Unit
,
Preferred Purchase Unit
. See also
Equity Contract Notes
,
Perpetual Preferred Stock (Perp)
.
Glossary
*
C