Tier 2 Note Features

This section describes the key features of Tier 2 Notes and explains certain events that may occur while a Tier 2 Note is on issue.

Interest on Tier 2 Notes

  • is scheduled to be paid periodically (typically quarterly) in cash and does not carry Franking Credits
  • may vary due to Market Rate movements (if interest is payable at a floating rate)
  • will be paid on the scheduled payment dates, provided the Solvency Condition is satisfied
  • is cumulative, meaning that any unpaid interest will accumulate over time and Tier 2 Note investors are entitled to any unpaid interest on the first date on which the Solvency Condition is satisfied

Understanding Tier 2 Note terms

Tier 2 Notes typically have an Optional Redemption feature that applies at least five years from Issue Date. The maturity date is usually at least ten years from the Issue Date.

A Tier 2 Note may also be impacted by an Optional Redemption due to a Tax Event or Regulatory Event.

Loss Absorption

Conversion or Write-Off may apply at any time due to the occurrence of a Non-Viability Trigger Event.

Accessing Tier 2 Notes

Summary of Tier 2 Note 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 interest payments

On each interest

payment date

No

Yes, subject to the Solvency Condition

Amount determined by Interest Rate

Cash

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 Redemption On the scuedled date or if a Tax Event or Regulatory Event occurs Yes Yes $100 per Hybrid1 Cash
Redemption at the Maturity Date On the scheduled date No Yes $100 per Hybrid1 Cash

Conversion due to a Loss Absorption Event

If a Non-Viability 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 occurs No No $0 N/A

1Assuming a Face Value of $100

Hybrid securities education