EBA · 2014_1071 Final Q&A

Treatment as own funds under Regulation (EU) No 575/2013 (CRR)

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
52, 63, 484
Topic
Own funds
Submitted by
Credit institution
Submitted
2014-04-14
Answered
2014-06-06
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Confirmation is sought that instruments that initially qualified for transitional treatment in a higher own funds category according to CRR transition rules in Articles 484ff, but for which documentation had to be altered to a lower own funds category as instructed by a court ruling following a litigation, are to be reported as fully compliant with that lower own funds category. More background information on the instruments will be made available directly to EBA.

Background

Treatment of own funds instruments where terms and conditions were clarified and retrospectively altered as instructed by a Court ruling.

Answer

Q&A 2013-16 indicates that "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", without distinguishing cases where these changes have been triggered by the institution or imposed by an external party, which should then apply similarly. In order for the amended instrument to be reported as fully compliant with the lower own funds category, it would need to meet all CRR eligibility criteria for this category (in particular the absence of incentives to redeem).

Original source: European Banking Authority, Q&A ID 2014_1071

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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