EBA · 2022_6456 Rejected question

Early redemption options

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
72b, para. 2
Topic
Own funds
Submitted by
Law firm
Submitted
2022-05-18
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Question

Would an early redemption option exercisable by the holder of the instrument cause such instrument to be ineligible altogether or would it merely result in its maturity being deemed shortened in accordance with Article 72c(2)?

Background

Article 72b(2)(h) provides that eligible liabilities shall not be redeemable by the holders of the instruments prior to their maturity, except in the cases referred to in Article 72c(2). Article 72b(2)(l), on the other hand, provides that the creditor of eligible liabilities shall not have the right to accelerate the future scheduled payment of interest or principal, other than in the case of the insolvency or liquidation of the resolution entity. Given that "acceleration" is just another term for "redemption prior to maturity", the said provisions appear to be in conflict with each other without any clear indication on which one shall prevail.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2022_6456

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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