Minority Interests and guidance on additional own funds (P2G)

The guidance on additional own funds (P2G) set out in Article 104b(3) of Directive 2013/36/EU (CRD), as amended by Directive (EU) 2019/878, constitutes a supervisory expectation with regard to the level of capital an institution should have to cover all possible risks and absorb losses from stress scenarios. Compliance with such expectation does not automatically need to be enforced by the supervisor. The P2G as a capital target is different in nature from the Pillar 2 capital requirement which covers risks not sufficiently covered by Pillar 1 and which could lead to the withdrawal of the authorisation, if not complied with. Article 84(1)(a)(i) of the CRR takes into consideration only capital requirements, not capital expectations, as it refers to the amount of CET1 capital of a subsidiary required to meet the sum of the requirement. In addition, it has to be noted that Article 84(1)(a)(i) does not refer to Article 104b(3) of the CRD. The P2G can therefore not be taken into account when determining the amount of minority interests of a subsidiary that is included in an institution`s consolidated CET1 capital according to Article 84(1) of the CRR. Disclaimer: The answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.