EBA · 2013_28 Final Q&A

Grandfathering of capital instruments

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
484, 486
Topic
Own funds
Submitted by
Credit institution
Submitted
2013-07-05
Answered
2013-11-15
Answer provided by
ESAs (EBA, ESMA, EIOPA)

Question

This question concerns two types of non-innovative Hybrid Tier 1 instruments (both issued before 31 December 2011): -- Type A: securities with first call date occurred in year 5, and before 31 December 2012; -- Type B: securities with first call date occurred in year 5, and after 31 December 2012. Questions: 1. For both A and B, is it correct to follow Article 484(4) & Article 486(3) for grandfathering guidelines? 2. For both A and B, is it correct to assume that the amount in excess of the applicable Tier 1 grandfathering percentage limit will be treated as grandfathered Tier 2 capital, i.e. being subject to the Tier 2 cap, as per Article 487(2)? 3. Alternatively, for both A and B, can the amount in excess of the applicable Tier 1 grandfathering percentage limit be treated as Tier 2 in full from 1 January 2014? Since they are meeting all the criteria for Tier 2 capital under Regulation (EU) No. 575/2013, as per Article 63 post the call date?

Background

Many issuers have non-step Tier 1 outstanding.

Answer

See QA 2013 31 .

Original source: European Banking Authority, Q&A ID 2013_28

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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