Cascade of liability

(1) Shares, other Common Equity Tier 1 instruments, relevant capital instruments and eligible liabilities under section 65(4), and bail-inable liabilities, are drawn on to bear losses in the following order:
1. shares and other Common Equity Tier 1 instruments,
2. Additional Tier 1 instruments,
3. Tier 2 instruments,
4. eligible liabilities under section 65(4) and bail-inable liabilities. A category referred to in the first sentence, points 2 to 4, is drawn on only once the amount determined under section 96(1) for the respective preceding category has not been reached by measures of the resolution authority. Within eligible liabilities under section 65(4) and bail-inable liabilities, the first sentence applies correspondingly to the rank that the liabilities would have held as insolvency claims.
(2) In applying the instrument for the participation of holders of relevant capital instruments or the creditor participation instrument, the resolution authority allocates the losses expressed in the amount determined under section 96(1), having regard to the cascade of liability, evenly to shares or other Common Equity Tier 1 instruments, Additional Tier 1 instruments, or Tier 2 instruments, and to eligible liabilities under section 65(4) and bail-inable liabilities of equal rank. For this purpose, it writes down the nominal value of those shares and the nominal value or outstanding balance of the other capital instruments and eligible liabilities under section 65(4), or of those bail-inable liabilities, to the same extent, in proportion to their nominal value, or converts them to the same extent, in proportion to their nominal value. The first sentence does not apply where a different allocation of losses within liabilities of the same rank is permitted under section 92(1).