Before diving into the details about contingent capitals, it is worth understanding the reasons for
bringing contingent capital into the capital structure. From the regulators' perspective, it is hoped
that contingent capital could solve the too-big-to-fail problem and reduce the loss paid by taxpayers
instead of the investors. Compared to issuing new stocks, investors want to take advantage of the
debt-like feature of the contingent capital: tax deductibility before the conversion and upfront and
fixed recapitalization cost at conversion