4.8.2 The exercise of the PONV conversion power and the application of the bail-in tool

Where the PONV conversion power is exercised and/or the bail-in tool is applied, the purpose is to (i) ensure that the net asset value (NAV) of the bank in resolution is (at least) equal to zero (that is, the level of liabilities does not exceed the level of assets), and (ii) the CET 1 capital ratio is restored. The application of the bail-in tool also serves to sustain sufficient market confidence in the bank, and to allow it to carry on the activities, for which it was authorized, for at least one year.1

The bail-in tool may also be used to establish the ratio of a bridge institution, meet the capital needs of an asset management vehicle or enable a transfer under the sale of business tool.