Interim profits attributable to minority shareholders

Is the prior permission of the competent authority needed at individual level of a subsidiary to include in the consolidated CET1 items the interim profits of that subsidiary attributable to minority shareholders?

An institution intends to include in its consolidated CET1 capital minority interests pursuant to Articles 81 and 84 CRR, including a portion of interim profits of its subsidiary attributable to minority shareholders. The issue is whether in order to do so a prior permission at consolidated level is enough or whether a prior permission at the level of the subsidiary is also needed taking into account the following two Q&As. EBA Q&A 2018_3823 : “1. The permission to include interim profits within CET1 capital under the conditions as set out in Article 26(2) of Regulation (EU) No 575/2013 (CRR) may be granted by competent authorities at several levels of consolidation within a group, and the respective decisions made by competent authorities are not linked. The permission may be granted by the consolidating supervisor in the absence of permission granted at the individual level, especially in the case where an institution is supervised only at the consolidated level due to a derogation following Article 7 CRR. 2. When determining the dividend pay-out ratio according to Article 2(7) of Regulation (EU) 241/2014 at consolidated level, foreseeable dividends at the individual level should be taken into account, as dividends are determined and paid on the individual basis.” EBA Q&A 2017_3111 : “Article 84 CRR provides the calculation methodology for minority interests in a subsidiary referred to in Article 81 CRR that can be included in the consolidated Common Equity Tier 1 capital. For the purpose of this calculation, Article 84(1)(a) CRR refers to the ‘Common Equity Tier 1 capital of the subsidiary’ but not to the Common Equity Tier 1 capital of the subsidiary that is included at the consolidated level after the consolidation adjustments. Therefore, the sum of Common Equity Tier 1 instruments with their associated share premium account, retained earnings and other reserves of a subsidiary referred in Article 81(1) CRR should refer to the amount before consolidation.”