Tier 1 Hybrid Features

This section describes the key features of Tier 1 Hybrids and explains certain events that may occur while a Tier 1 Hybrid is on issue.

Distributions on Tier 1 Hybrids

  • are scheduled to be paid periodically (typically quarterly or semi-annually) and may carry Franking Credits
  • may vary due to Market Rate movements (if distributions are payable at a floating rate)
  • are discretionary and will not be paid if Payment Restrictions exist
  • are non-cumulative, meaning unpaid distributions do not accumulate over time and investors have no claim over any unpaid distributions
  • if not paid, typically restrict the Bank from paying dividends on Ordinary Shares

Understanding Tier 1 Hybrid terms

Tier 1 Hybrids are perpetual instruments, which typically have an Optional Redemption and Optional Conversion features that apply at least five years from Issue Date. Mandatory Conversion features apply at least seven years from the Issue Date, if the Tier 1 Hybrid has not been Redeemed, Resold or Converted earlier.

A Tier 1 Hybrid may also be impacted by:

  • Optional Redemption due to a Tax Event or Regulatory Event
  • Conversion on Acquisition of the Bank
  • Return of investment due to an Optional Resale

Loss Absorption

Conversion or Write-Off may occur at any time due to the occurrence of a Common Equity Trigger Event and/or Non-Viability Trigger Event.

Assessing Tier 1 Hybrids

SUMMARY OF TIER 1 HYBRID FEATURES

What can happen?

When does this happen?

Is APRA approval needed?

Do conditions apply?

What value will Hybrid investors receive?

In what form will that value be provided?

Periodic distributions

On each distribution payment date

No

Yes, discretionary and subject to the Payment Restriction

Amount determined by Distribution Rate

Cash and any applicable Franking Credits

Secondary market sale of investment

At the investor's discretion, subject to market conditions

No

N/A

Prevailing market price at the time of sale, less any brokerage costs

Cash

Optional Redeption or Optional Resale

On the scheduled date or if a Tax Event or Regulatory Event occurs

Yes

Yes

$100 per Hybrid1

Cash

Optional Conversion

On the scheduled date, if a Tax Event or Regulatory Event occurs or if certain steps are taken to acquire the Bank

Yes

Yes

Approximately $101 per Hybrid1

Variable number of Ordinary Shares

Mandatory Conversion

On the scheduled date or if the Bank is acquired

No

Yes

Approximately $101 per Hybrid1

Variable number of Ordinary Shares

Conversion due to a Loss Absorption Event

If a Non-Viability Trigger Event or a Common Equity Trigger Event occurs

No

No

Depending on the market price of Ordinary Shares, significantly less than the Face Value

Variable number of Ordinary Shares

Write-Off due to a Loss Absorption Event

If a Non-Viability Trigger Event or a Common Equity Trigger Event occurs

No

No

$0

N/A

1 Assuming a Face Value of $100

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