The report presents the first results of the review done by the European Banking Authority (EBA) on the issuances of Additional Tier 1 (AT1) capital instruments. The Capital Requirements Regulation (CRR) tasks the EBA with monitoring the quality of own funds instruments issued by institutions across the European Union (EU). This review is preliminary and the EBA expects to gather further insight on the basis of future issuances.
While the review delivered today by the EBA is not intended to be fully comprehensive and has been limited in terms of scope and number of issuances, it highlights some existing clauses for future issuances that the EBA deems necessary to revise, as well as some clauses currently under consideration for future use, that the EBA recommends avoiding.
The terms and conditions of selected issuances have been assessed against the applicable regulatory provisions. New issuances and new types of clauses in future may have an influence on the preliminary conclusions of this report.
In addition, while assessing some issuances, the EBA identified a number of areas where further guidance might be necessary for a common interpretation of the CRR provisions. This report provides the EBA's views on some of these issues, while other remaining points are still being investigated by the EBA and will be further clarified through its Q&A tool
in due time.
The EBA will continue to exchange views with institutions and market participants on the preliminary results of this monitoring. It remains ready to discuss the content of this report more in detail in order to assess whether further consideration should be given to any specific aspects and in order to collect opinions on the areas still under investigation.
Legal basis and next steps
Pursuant to Article 80 of Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR) on the continuing review of quality of own funds, the ‘EBA shall monitor the quality of own funds instruments issued by institutions across the Union'.
The CRR lays down eligibility criteria for AT1 instruments (in particular Articles 51 to 55). Those criteria are supplemented by the Commission Delegated Regulation (EU) No 241/2014 (Regulatory Technical Standards (RTS) on own funds). Several AT1 instruments have now been issued by European institutions in accordance with those