Application of transitional provisions to Additional Tier 1 and to Tier 2 instruments with an incentive to redeem

Articles 489(5) and 490(5) refer to cases where the institution "was able" to exercise a call after a certain date. Where the institution was not able to exercise any such call with regard to the respective instrument before 1 January 2013, Article 489(5) and 490(5), respectively, will apply. The ability to exercise a call should be assessed only against legal constraints applying to the banks which are outside of the control of the institution (i.e. excluding amendments to the contract of the instrument) and not encompass economic or other considerations. The impossibility to exercise the call (during the whole period between 31 December 2011 and 1 January 2013) due to state aid rules may indeed be interpreted as a legal obstacle which is relevant for the purposes of Article 489(5)(a) for determining whether the institution was able to exercise the call. Article 491(a) refers to the date of the first call date of an instrument with an incentive to redeem occurring on or after 1 January 2013. Since Article 491(a) explicitly defines effective maturity for the purpose of Articles 489 and 490, it should be read in conjunction with those Articles. Therefore, a call date should be interpreted as a date on which an institution was able to exercise a call. 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.