A capital instrument that is subject to specific terms and conditions for eligibility as part of tier 1 capital (AT1 capital) base of the issuing bank. It is a type of perpetual debt securities that banks use to support their core equity base.

Additional tier-1 (AT1) bonds are part of a family of bank capital securities broadly known as contingent convertibles (CoCos). With AT1 securities/ instruments (AT1 capital instruments), a bank can absorb losses on a going-concern basis, although these instruments do not meet all the criteria for common equity tier-1 capital (CET1). AT1 consists of instruments that are originally not common equity but can be made part of this tier on an eligibility basis (i.e., subject to an eligibility test).

AT1 securities/ instruments are paid-up capital instruments and any share premium account associated with these instruments. These instruments are usually issued as hybrid debt instruments (contingent convertibles, CoCo), which can be written down or converted to CET1 instruments subject to a prespecified trigger event (as in the case the CET1 capital ratio falls below a minimum level  or increases beyond a maximum level (e.g., 5.125%). By nature, AT1 instruments must not involve any terms or features that could prevent the recapitalization of an entity in the case of a trigger event.