Grandfathering of own funds instruments

Question

Would a contractual change of a capital instrument terms and conditions (T&C) issued before December 31, 2011 allow a bank to keep the instrument in the own funds within the limits provided for in Articles 484 and 486 (grandfathering eligibility and limits of capital instruments that are not State aid) if the amendments to the T&C would not make the instrument entirely compliant with the provisions of Regulation (EU) No 575/2013 but are limited to remove the contractual conditions that would determine the disqualification of the instrument during the grandfathering period (e.g.: deletion from the T&C of a Tier 2 capital instrument of the call option and of the incentive to redeem clause)?

European Banking Authority · Accepted Answer

A material change in the terms and conditions of a pre-existing instrument shall be considered in the same way as the issuance of a new instrument, meaning that the changes shall aim at ensuring a full eligibility under the provisions of Regulation (EU) No 575/2013 but shall not aim at allowing a grandfathering of the instrument. This reasoning holds true for all types of capital instruments.

Grandfathering of own funds instruments

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