Quote Originally Posted by Lego_Man View Post
It won't. Top of the stack will be secured/covered bondholders, depositors, then senior unsecured bonds (most of the ones on issue). By the time you get to Tier 2 there is less chance of repayment, and AT1 basically no chance in a failure scenario. However a government bailout/recap might make whole the AT1 holders and not the regular equityholders.

As I understand it, back in the day the government guarantee as applied to South Canterbury Finance covered the plain vanilla Bonds but not the Perpetual Preference Shares.

This may set a precedent in the minds of those designing the current arrangement.