BNP Future AT1s to Count as Debt, Amend Writedown Rule (Correct)

French bank BNP Paribas SA is updating the way it issues dollar-denominated additional tier 1 bonds so that they will be accounted for as debt instead of equity.

The bank’s current AT1s will not be amended to reflect the new language, according to a presentation. The new bonds will convert to shares at the dedicated conversion ratio, while existing notes will be written down if the bank’s common equity tier 1 capital falls below 5.125%.

The change will “avoid P&L volatility due to FX accounting treatment,” the bank wrote. In May, BNP shareholders authorized “capital increases with the cancellation ...