EBA · 2013_221 Final Q&A

Exemptions from deduction for CET1 items

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
48, para. 1
Topic
Own funds
Submitted by
Competent authority
Submitted
2013-09-09
Answered
2014-09-26
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

In Article 48(1)(b) of Regulation (EU) No 575/2013 (CRR) it states: 'where an institution has a significant investment in a financial sector entity, the direct, indirect and synthetic holdings of that institution of the CET1 instruments of those entities that in aggregate are equal to or less than 10% of the CET1 items of the instritution calculated after applying the following:' Question: When making the comparison between the amount of investment and CET1 of the reporting institution, does that comparison refer to the aggregate amount of all significant investments in all financial sector entities OR the comparison should be made on an individual entity basis?

Background

Further clarification is needed because the impact on the own funds would be significantly different in applying the 2 scenarios.

Answer

Article 48(1)(b) of Regulation (EU) No 575/2013 (CRR) clearly states that the comparison has to be made between all the reporting institution's holdings in financial sector entities in aggregate and the threshold of 10% of the reporting institution. DISCLAIMER: This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Internal Market and Services) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Original source: European Banking Authority, Q&A ID 2013_221

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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