A callable security is one where the issuer has the right (but not obligation) to redeem (usually at par) the security at a fixed date (or dates) in the future. The exact terms on which the security can be called will be found in the prospectus.

Usually the coupon (interest or dividend) rate paid by the security will be reset to a new rate (defined in the prospectus) after the first call date if the issuer does does exercise its option to redeem.

Most PIB’s, bank sub-ordinated bonds and many bank preference shares are callable and prior to the banking crisis it was a convention that they would exercise their right to call at the first call date. However, with EU intervention and less availability of capital for banks it remains to be seen whether this convention will continue in future.