EBA updates list of CET1 instruments

The European Banking Authority (EBA) published today its sixth updated list of capital instruments that Competent Authorities (CAs) across the European Union (EU) have classified as Common Equity Tier 1 (CET1). Since the publication of the previous update in May 2017, some new CET1 instruments have been assessed and evaluated as compliant with the Capital Requirements Regulation (CRR). The list will be maintained and updated on a regular basis.

 

Since the publication of its fifth updated list of CET1 capital instruments on 23 May 2017, the EBA has continued its monitoring and assessment of new CET1 instruments. This update includes two new forms of CET1 instrument issued in two Member States, which have been assessed and evaluated as compliant with the CRR and added to the CET1 list. 

 

Since its first publication, the EBA has been assessing the terms and conditions of all new instruments included in the CET1 list against the regulatory provisions, with the aim of identifying any discrepancy with the eligibility criteria. In several cases, the EBA requested amendments to the terms and conditions of such instruments, mainly relating to the flexibility of payments.

 

The list has to be read in conjunction with the CET1 Report, published last May, which provides some background on the monitoring work done to establish the CET1 list. The Report also provides external stakeholders with further guidance on the content and objectives of the CET1 list, clarity on the consequences of the inclusion (or exclusion) of an instrument in (or from) the list and feedback on the outcome of the EBA monitoring work on CET1 issuances across the EU. 

 

The next update of the list will include, in particular, modifications related to the grandfathering of State Aid instruments under Article 483 of the CRR, which will elapse at the end of 2017.

Article 26(3) of the CRR mandates the EBA to establish, maintain and publish a list of all the forms of capital instruments in each Member State that qualify as CET1. In addition, Article 80(1) mandates the Authority to monitor the quality of own funds instruments and notify the Commission immediately where there is significant evidence of those instruments not meeting the criteria set out in Article 28 or, where applicable, Article 29.