The EBA responds to law firm on the prudential treatment of a BNP Paribas legacy instrument

The European Banking Authority (EBA) published today a response to the letter received from a law firm on 11 September 2023, regarding the case of the prudential classification as Tier 2 instrument of a legacy perpetual bond (so-called ‘Discos’) of an institution established in France (BNP Paribas). 

After careful consideration of the concerns raised, and scrutiny of the detailed terms and conditions of the legacy instrument, the EBA assessed that it cannot count as a fully eligible Tier 2 instrument of BNP Paribas. The EBA shared this assessment with the relevant competent authority for its own consideration, as well as to be informed of the next steps it intended to take, in particular with regard to the EBA Opinion on legacy instruments and the cascading options it contains.

The EBA will continue monitoring the residual limited stock of legacy instruments in coordination with the concerned competent authorities.

Note to the editors 

In October 2020, the EBA published its Opinion on the prudential treatment of so-called ‘Legacy instruments’ in the context of the end of the grandfathering period in December 2021. On 7 July 2022 the EBA published the outcome of the implementation of its Opinion.