Canadian federal statutes pertaining to banks, which we refer to collectively as the
bail-in
regime, provide for a bank recapitalization regime
for banks designated by the Superintendent of Financial Institutions (
Canada
) (the Superintendent) as domestic systemically important banks, which include the Bank. We refer to those domestic systemically important banks as
D-SIBs.
See Description of the Debt Securities We May OfferCanadian Bank Resolution Powers for a description of the Canadian bank resolution powers, including the
bail-in
regime.
If the CDIC were to take action under the Canadian bank resolution powers with respect
to the Bank, this could result in holders or beneficial owners of the debt securities being exposed to losses and, in the case of bail-inable debt securities, conversion of such bail-inable debt securities in whole or in partby means of a
transaction or series of transactions and in one or more stepsinto common shares of the Bank or any of its affiliates, which we refer to as a
bail-in
conversion. Subject to certain exceptions
discussed under Description of the Debt Securities We May OfferCanadian Bank Resolution Powers, including for certain structured notes, senior debt securities issued on or after September 23, 2018, with an initial or amended
term to maturity (including explicit or embedded options) greater than 400 days, that are unsecured or partially secured and that have been assigned a CUSIP or ISIN or similar identification number, are subject to
bail-in
conversion. Shares, other than common shares, and subordinated debt securities of the Bank are also subject to a
bail-in
conversion, unless they are
non-viability
contingent capital. We refer to senior debt securities that are subject to
bail-in
conversion as bail-inable debt securities.
Upon a
bail-in
conversion, if your bail-inable debt securities or any portion thereof are converted
into common shares of the Bank or any of its affiliates, you will be obligated to accept those common shares, even if you do not at the time consider the common shares to be an appropriate investment for you, and despite any change in the Bank or
any of its affiliates, or the fact that the common shares may be issued by an affiliate of the Bank, or any disruption to or lack of a market for the common shares or disruption to capital markets generally.
As a result, you should consider the risk that you may lose all of your investment, including the principal amount plus any accrued interest,
if the CDIC were to take action under the Canadian bank resolution powers, including the
bail-in
regime, and that any remaining outstanding debt securities, or common shares of the Bank or any of its
affiliates into which bail-inable debt securities are converted, may be of little value at the time of a
bail-in
conversion and thereafter. Such losses may not be offset by compensation, if any, received as
part of the compensation process.
The senior debt securities indenture will provide only limited acceleration and enforcement rights for
bail-inable debt securities issued thereunder and includes other provisions intended to qualify bail-inable debt securities as TLAC.
In connection with the
bail-in
regime, the Office of the Superintendent of Financial Institutions
(OSFI) guideline (the TLAC Guideline) on Total Loss Absorbing Capacity (TLAC) applies to and establishes standards for
D-SIBs,
including the Bank. Under the TLAC Guideline,
beginning November 1, 2021, the Bank is required to maintain a minimum capacity to absorb losses composed of unsecured external long-term debt that meets the prescribed criteria or regulatory capital instruments to support recapitalization in
the event of a failure. Bail-inable debt securities and regulatory capital instruments that meet certain prescribed criteria, which are discussed under Description of the Debt Securities We May OfferCanadian Bank Resolution Powers,
will constitute TLAC of the Bank.
In order to comply with the TLAC Guideline, where the bail-inable debt securities contain events of
default, the indenture under which bail-inable debt securities may be issued provides that, for any bail-inable debt securities, acceleration will only be permitted (i) if we default in the payment of the principal of, or interest on, any debt
security of that series and, in each case, the default continues for a period of 30 business days, or (ii) certain bankruptcy, insolvency or reorganization events occur.
Holders or beneficial owners of bail-inable debt securities may only exercise, or direct the exercise of, the rights described under
Description of the Debt Securities We May OfferEvents of DefaultRemedies If an
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