(1) In applying the Bail-in Tool under RAR Rule 3.4.1
, the DFSA shall assess for the purposes of (2), on the basis of the Pre-Resolution Valuation or Provisional Valuation, the aggregate of:
(a) where applicable, the amount by which capital instruments and Eligible Liabilities are to be written down in order to ensure that the net asset value of the Authorised Firm in Resolution is equal to zero; and
(b) where applicable, the amount by which capital instruments and Eligible Liabilities are to be converted into Shares or other types of capital instruments in order to restore the CET1 Capital ratio of the Authorised Firm in Resolution.
(2) The purpose of the assessment under (1) is to establish the amount by which Eligible Liabilities need to be written down or converted in order:
(a) to restore the CET1 Capital ratio of the Authorised Firm in Resolution;
(b) to sustain sufficient market confidence in the Authorised Firm in Resolution; and
(c) to enable the Authorised Firm to continue, for at least twelve months, to satisfy the requirements for authorisation and to carry on the activities or services for which it is authorised.
(3) Where capital instruments have been written down in accordance with the Write Down or Conversion Power under RAR Rule 3.2.5
, the Bail-in Tool has been applied, and the level of write down based on the Pre-Resolution Valuation is found to exceed requirements when assessed against the Definitive Valuation, a write up mechanism may be applied to reimburse creditors and then shareholders to the extent necessary.