Implementation of Article 72b(2)(j) of Regulation (EU) No 575/2013 (“CRR”) and whether the contractual provisions governing liabilities are required to refer to the permission regime in order for the liabilities to qualify as eligible liabilities instruments

Any call options, redemptions or repurchase transactions related to liabilities must meet the requirements of Article 72b(2)(i), (j) and (k) of Regulation (EU) No 575/2013 (CRR) for those liabilities to qualify as eligible liabilities instruments. For liabilities to qualify as eligible liabilities instruments, Article 72b(2)(j) stipulates that the institution may only effect the call, redemption, repayment or repurchase prior to the date of an instrument's contractual maturity where the conditions set out in Article 77 and 78a are met (i.e. where the prior permission of the resolution authority has been obtained). In line with EBA Q&A 2013_544 liabilities, which shall qualify as eligible liabilities, should therefore contain an explicit reference to these regulatory conditions in their terms. The inclusion of a reference to these regulatory conditions in their terms would be in line with the EBA recommendation (14) of the EBA report on the monitoring of TLAC/MREL-eligible liabilities instruments (EBA/REP/2020/27) stating that the terms and conditions of eligible liabilities instruments should contain an explicit reference to the need for prior approval from resolution authorities of reductions in eligible liabilities, as in the case of own funds instruments.