Clarification of the conditions for reduction of own funds due to Article 77 CRR and Article 28 RTS on Own funds.

Pursuant to Article 28(2) of Regulation (EU) No 241/2014 (RTS on Own Funds requirement for institutions) the deduction from own funds should be made from the moment the authorisation from the competent authority has been granted and the redemptions, reductions and repurchases are expected to take place with sufficient certainty.   Article 28(1) of Delegated Regulation (EU) No 241/2014 provides that redemptions, reductions and repurchases of own funds instruments shall not be announced to holders of the instruments before the institution has obtained the prior permission of the competent authority. Article 28(2) of Delegated Regulation (EU) No 241/2014 states: “Where the actions listed in Article 77(1) of Regulation (EU) No 575/2013 are expected to take place with sufficient certainty, and once the prior permission of the competent authority has been obtained, the institution shall deduct the amounts of own funds instruments to be redeemed, reduced or repurchased or the corresponding amounts of the related share premium accounts to be reduced or distributed, as applicable, from corresponding elements of its own funds before the effective redemptions, reductions, repurchases or distributions occur. Sufficient certainty shall in particular be deemed to exist where the institution has publicly announced its intention to redeem, reduce or repurchase an own funds instrument.” In accordance with Q&A 2014_1352 S s ufficient c c ertainty is deemed to exist already from the moment the authorisation is granted. However, for instruments containing call options in their terms and conditions, in case of the use of the call, sufficient certainty is deemed to exist only at the time of the announcement of the call of the instrument to the holders and the deduction will take place only at that later point in time. For the sake of completeness, the above answer applies in an identical manner to any action described in Article 77(2) CRR to eligible liabilities instruments in accordance with Article 32b(2) of Delegated Regulation (EU) No 241/2014.