The situation that arises when a regulator considers a bank to be no longer viable (point of non-viability, PONV), setting off a trigger whereby it forces the loss absorption of a CoCo bond (CoCo debt), earlier issued by the bank, even if the most recent published common equity tier-1 capital (CET1) is above the trigger level.

Contingent Convertibles (CoCos) have triggers that forces an automatic conversion to common stock (equity) or writing down. The investors who purchased the CoCo bond are perceived to have implicitly written out a cheque to the regulators. The minimum regulatory trigger event occurs when the CET1 ratio drops to a minimum level (e.g., 5.125%) or lower.

Regulatory triggers belong to a set of trigger points (in addition to, accounting trigger, market trigger, and multiple trigger).

A regulatory trigger is also known as a PONV trigger.