Definition of Additional Tier 1 instruments for the purposes of Article 141 of Directive 2013/36/EU

Article 141 of Directive 2013/36/EU (CRD) lays down provisions regarding restrictions on distributions where an institution is in breach of its combined buffer requirement. These restrictions also apply to payments on Additional Tier 1 (AT1) instruments. Since instruments that used to qualify as original own funds under the national transposition of Articles 57(ca) and 154(8) and (9) of Directive 2006/48/EC are, according to Article 484(4) of Regulation (EU) No 575/2103 (CRR), qualified as AT1 items (in the case of instruments, therefore as Additional Tier 1 instruments), they are also captured by the restrictions on distributions under Article 141 CRD. In this context it should be highlighted that Article 141(7) CRD contains a safeguard provision, according to which the restrictions imposed by Article 141 CRD shall only apply to payments that result in a reduction of Common Equity Tier 1 capital or in a reduction of profits, and where a suspension of payment or failure to pay does not constitute an event of default or a condition for the commencement of proceedings under the insolvency regime applicable to the 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 Financial Stability, Financial Services and Capital Markets Union) 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.