I'd have to understand the covenants better but at first blush, it would seem these CoCos are time bombs that could very well make a bad situation worse. If holders now know they can get gutted and not just take a haircut, their first impulse would be to convert to common (dilutive) then dump their shares, thus contributing to a downward equity spiral which might spook depositors and a bank run picks up steam. Sure, the CoCos give taxpayers some bailout protection, but as you say, central banks now have to jump into the breach to help with liquidity. So unless I'm missing something, a rethink of these CoCos as contributors to Tier 1 capital should be in order.