Response to consultation on Regulatory Technical Standards amending RTS on own funds and eligible liabilities
Q1: Do you consider it appropriate to revert to a three-month deadline for the prior permission regime for own funds and eligible liabilities instruments?
The EACB welcomes the opportunity to comment on the EBA draft RTS on the timing for the application for prior permission to reduce own funds and eligible liabilities instruments in accordance with Art. 77, 78 and 78a CRR.
We appreciate the EBA initiative to reduce from four months to three the deadline for the application to be submitted to the competent and resolution authorities for ad hoc and general prior permission before the date on which any of the actions referred to in Article 77 of Regulation (EU) No 575/2013 would be taken. This is in line with the industry feedback during the consultation phase of the prior RTS, which considered the four months' timeline for the permission to reduce own funds and eligible liabilities instruments as too long and excessively constraining flexibility in capital management.
We take note that the EBA decision considers that authorities have gained the necessary experience and are now able to process ad hoc and general prior permissions within a period shorter than four months. We agree with the vision that reverting to a shorter period will provide more flexibility to institutions in their requests for permission for redemption and capital planning purposes, while it is still seen as a sufficient and prudent timeline from a supervisory perspective.
While this timeline reduction is welcome, three months still seems unnecessarily long, also considering that other similar procedures have a shorter period. We encourage the EBA to continue monitoring the development of competences and processes among supervisors and reassess in the near future the possibility of re-adjusting the timeline for the permission to reduce own funds and eligible liabilities instruments, a dedicated clause to this effect would be helpful.