Question

Which of the following statements concerning PERLS X capital notes is NOT correct?

a. A trigger event can happen before the call date.
b. Trigger events can be initiated before the mandatory exchange date.
c. The RBA cannot initiate a trigger event.
d. A capital trigger can be pulled if the issuing bank has insufficient regulatory capital.
e. Trigger events are subject to exchange conditions before the conversion can happen.

Answer 1

The incorrect statement concerning PERLS X capital notes is:

c. The RBA cannot initiate a trigger event.

Step-by-step explanation:

As the regulator of banks in Australia, the RBA (Reserve Bank of Australia) has an obligation to initiate a trigger event when it considers that capital trigger should be initiated as part of its activities in regulating banks' regulatory capital. A capital trigger is an event when there is an exchange of equity to cash from an investor or group of investors. It can also happen if a hybrid capital is to be liquidated.