It stands for point of non-viability; a situation where a bank or other regulated institutions experience serious financial stress due to insufficient liquidity and/ or capital, triggering seizure and resolution by the regulator. Resolution is triggered when a regulator establishes reasonable grounds for its judgment that an institution is over-indebted or passing through serious liquidity problems or in the event that it fails to meet its capital adequacy requirements within a predefined deadline.
The capital trigger is met for a financial group on a consolidated basis or at the individual parent bank entity at the latest when total capital reaches 8% of the risk-weighted assets (RWAs) or its common equity tier-1 capital (CET1) reaches or falls below 5% of the risk-weighted assets (RWAs).
An instrument, held by a regulated entity, that is equipped with a point of non-viability (PONV) trigger, effectively serves as a bail-in debt. (e.g., a failure of the equity component of CoCo debt via a going concern conversion.)
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