Redemption

The Bonds they had invested in for retirement are declared as junk by credit rating agencies. A huge scam is exposed, whereby AT1 bonds meant for institutional selling were offloaded on retail customers by sales personnel of banks, before the bank failed and was taken over by another entity.

An uproar follows but no action is taken. Three years later, the person involved is indicted by forensic agencies of fraudulent siphoning of funds.

“Is there any hope of redemption?” is his last question to the Board of Directors.

“Can you redeem the confidence of investors by buying the bonds back?”

Note:

AT1 – Additional Tier1 bonds

These are unsecured bonds that have perpetual tenure. In other words, the bonds have no maturity date. They have a call option, which can be used by the banks to buy these bonds back from investors. These bonds are typically used by banks to bolster their core or tier-1 capital.

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