Adopted and published on the Official Journal
These amended Regulatory Technical Standards (RTS) on own funds and eligible liabilities capture several aspects of eligible liabilities as well as the changes to the own funds framework introduced in the revised Capital Requirements Regulation (CRR), namely relating to the regime of supervisory prior permission for the reduction of own funds and market making.
The European Banking Authority (EBA) has updated some of its existing Q&As on own funds and eligible liabilities to ensure consistency with the revised final draft Regulatory Technical Standards (RTS) on own funds and eligible liabilities submitted to the European Commission in May 2021. While the latter have not been finally adopted yet, the EBA deemed it important to already provide clarity to institutions and market participants on some undisputed aspects related to the RTS that are particularly relevant for their practical implementation of the Capital Requirements Regulation (CRR) and the RTS.
In particular, the EBA updated Q&A 2017_3277 on the notion of ‘sufficient certainty’ which relates to when an institution has to deduct from its own funds the amounts for which it has received a prior permission from the competent authority. The EBA has amended the Q&A as follows: when exercising a call option contained in the terms and conditions of an instrument, sufficient certainty is deemed to exist only at the time of the announcement of the call to the holders of the instrument, and the corresponding deduction will take place only at that point in time. The revised approach has benefitted from exchanges with market participants and is deemed to bring more clarity and convergence in existing practices. In addition, the revised Q&A extends the scope of the treatment to eligible liabilities instruments.
The EBA updates other existing Q&As with the aim of extending to eligible liabilities the treatment initially applied to own funds instruments. This is consistent with the approach announced when publishing the final draft RTS on own funds and eligible liabilities and recalling the importance of the prior permission regime for eligible liabilities, which pursues the same imperatives as the permission regime for own funds.
Article 1(5), second subparagraph, of Regulation (EU) No 1093/2010 (EBA Regulation), requests the EBA to ensure consistent, efficient, and effective application of acts referred to in Article 1(2) of that Regulation, which include the CRR. Regulation (EU) 2019/876 (CRR 2), amongst others, amended and introduced, respectively, Articles 77-78 and Article 78a of CRR on prior permission regime for reducing own funds and eligible liabilities. Consequently, the EBA amended its draft RTS to reflect the amendments to the Commission Delegated Regulation (EU) No 241/2014. Moreover, the EBA amended several replies to existing Q&As in accordance to these amendments. The existing Q&As have not been removed, but just updated. Changes to the existing Q&As have been made in track changes.
The European Banking Authority (EBA) has updated some of its existing Q&As on own funds and eligible liabilities to ensure consistency with the revised final draft Regulatory Technical Standards (RTS) on own funds and eligible liabilities submitted to the European Commission in May 2021. While the latter have not been finally adopted yet, the EBA deemed it important to already provide clarity to institutions and market participants on some undisputed aspects related to the RTS that are particularly relevant for their practical implementation of the Capital Requirements Regulation (CRR) and the RTS.
In particular, the EBA updated Q&A 2017_3277 on the notion of ‘sufficient certainty’ which relates to when an institution has to deduct from its own funds the amounts for which it has received a prior permission from the competent authority. The EBA has amended the Q&A as follows: when exercising a call option contained in the terms and conditions of an instrument, sufficient certainty is deemed to exist only at the time of the announcement of the call to the holders of the instrument, and the corresponding deduction will take place only at that point in time. The revised approach has benefitted from exchanges with market participants and is deemed to bring more clarity and convergence in existing practices. In addition, the revised Q&A extends the scope of the treatment to eligible liabilities instruments.
The EBA updates other existing Q&As with the aim of extending to eligible liabilities the treatment initially applied to own funds instruments. This is consistent with the approach announced when publishing the final draft RTS on own funds and eligible liabilities and recalling the importance of the prior permission regime for eligible liabilities, which pursues the same imperatives as the permission regime for own funds.
Article 1(5), second subparagraph, of Regulation (EU) No 1093/2010 (EBA Regulation), requests the EBA to ensure consistent, efficient, and effective application of acts referred to in Article 1(2) of that Regulation, which include the CRR. Regulation (EU) 2019/876 (CRR 2), amongst others, amended and introduced, respectively, Articles 77-78 and Article 78a of CRR on prior permission regime for reducing own funds and eligible liabilities. Consequently, the EBA amended its draft RTS to reflect the amendments to the Commission Delegated Regulation (EU) No 241/2014. Moreover, the EBA amended several replies to existing Q&As in accordance to these amendments. The existing Q&As have not been removed, but just updated. Changes to the existing Q&As have been made in track changes.
The European Banking Authority (EBA) published today a Consultation Paper on the draft amended Regulatory Technical Standards (RTS) on own funds and eligible liabilities. Since their entry into force, the RTS on own funds have significantly enhanced regulatory harmonisation of prudential rules and contributed to strengthening the quality of regulatory capital. With the revised Capital Requirements Regulation (CRR) introducing new criteria and requirements for eligible liabilities, these amended RTS capture several aspects of eligible liabilities as well as the changes to the own funds framework. The consultation runs until 31 August 2020.
The draft RTS align existing provisions to changes introduced in the revised CRR in the area of own funds. This is the case, in particular, for provisions relating to the regime of supervisory prior permission for the reduction of own funds and market making.
In addition, the draft amended RTS specify some of the newly introduced criteria for eligible liabilities instruments derived from the own funds regime. These include the absence of direct or indirect funding for the acquisition of ownership of eligible liabilities, the absence of incentives to redeem, the need for the resolution authority’s prior permission for the reduction of eligible liabilities. For some of these aspects, the mandates attributed to the EBA explicitly require to ensure full alignment between eligible liabilities and own funds.
Responses to this consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 31 August 2020.
A public hearing on this consultation will take place at the EBA premises in Paris on 24 June 2020 from 10:00 to 12:30 CET.
The EBA has updated the RTS on own funds, in accordance with the original RTS mandates granted to the EBA under Articles 28(5), 29(6), 52(2), 76(4), 78(5) and 79)2) of Regulation (EU) No 575/2013 (‘CRR’). The draft amended RTS related to eligible liabilities have been developed in accordance with Articles 72b(7) and 78a(3) CRR.
The European Banking Authority (EBA) published today an Opinion on the amendments proposed by the European Commission to the EBA final draft Regulatory Technical Standards (RTS). In the Opinion the EBA expresses its disagreement with two substantive changes proposed by the Commission and agrees with the other amendments, which are considered non-substantive.
The European Commission’s version of the RTS, compared to the final draft RTS submitted by the EBA in May 2021, includes two substantive changes related to: i) the provisions covering the notions of direct and indirect funding and ii) the prior permission process for certain types of liquidation entities.
Concerning the notions of direct and indirect funding, the EBA considers that the RTS already contain, from a supervisory perspective, the necessary principles or tools needed for capturing all cases of direct or indirect funding without any additional description.
Further, the EBA considers that its final draft RTS designed a prior permission regime proportionate to the goals of the regulation and is of the opinion that no change is warranted .
This Opinion is based on Article 10(1) of Regulation (EU) No 1093/2010, which requires the Authority to submit its response in the form of an opinion to amendments proposed by the European Commission.
On 26 May 2021 the EBA submitted its final draft RTS and on the 24 February 2022, the EC sent a letter to the EBA about its intention to endorse the RTS with amendments and submitted a modified version of the RTS.
The European Banking Authority (EBA) published today its final draft Regulatory Technical Standards (RTS) on own funds and eligible liabilities. Since their entry into force, the RTS on own funds have significantly enhanced regulatory harmonisation of prudential rules and contributed to strengthening the quality of regulatory capital. With the revised Capital Requirements Regulation (CRR) introducing new criteria and requirements for eligible liabilities, these amended RTS capture several aspects of eligible liabilities as well as the changes to the own funds framework.
The draft RTS align existing provisions to changes introduced in the revised CRR in the area of own funds. This is the case, in particular, for provisions relating to the regime of supervisory prior permission for the reduction of own funds.
In addition, the draft RTS specify some of the newly introduced criteria for eligible liabilities instruments derived from the own funds regime. These include the absence of direct or indirect funding for the acquisition of ownership of eligible liabilities, the absence of incentives to redeem, the need for the resolution authority’s prior permission for the reduction of eligible liabilities. For some of these aspects, the mandates attributed to the EBA explicitly require to ensure full alignment between eligible liabilities and own funds.
Following the feedback received during the public consultation, the calibration of the threshold for determining the predetermined amount for the general prior permission for reducing eligible liabilities instruments was increased from 3% to 10% of the total amount of outstanding eligible liabilities instruments. Moreover, the final draft RTS have been revised in order to recognise some relief for the renewal of general prior permission both for own funds and eligible liabilities and for introducing a proportionate approach for liquidation entities for which their minimum requirement for own funds and eligible liabilities (MREL) does not exceed the loss absorption amount.
The EBA has updated the RTS on own funds, in accordance with the original RTS mandates granted to the EBA under Articles 28(5), 29(6), 52(2), 76(4), 78(5) and 79(2) of Regulation (EU) No 575/2013 (‘CRR’). The provisions of the RTS related to eligible liabilities have been developed in accordance with Articles 72b(7) and 78a(3) CRR. The final standards have been sent to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.
The European Banking Authority (EBA) published today a Consultation Paper on the draft amended Regulatory Technical Standards (RTS) on own funds and eligible liabilities. Since their entry into force, the RTS on own funds have significantly enhanced regulatory harmonisation of prudential rules and contributed to strengthening the quality of regulatory capital. With the revised Capital Requirements Regulation (CRR) introducing new criteria and requirements for eligible liabilities, these amended RTS capture several aspects of eligible liabilities as well as the changes to the own funds framework. The consultation runs until 31 August 2020.
The draft RTS align existing provisions to changes introduced in the revised CRR in the area of own funds. This is the case, in particular, for provisions relating to the regime of supervisory prior permission for the reduction of own funds and market making.
In addition, the draft amended RTS specify some of the newly introduced criteria for eligible liabilities instruments derived from the own funds regime. These include the absence of direct or indirect funding for the acquisition of ownership of eligible liabilities, the absence of incentives to redeem, the need for the resolution authority’s prior permission for the reduction of eligible liabilities. For some of these aspects, the mandates attributed to the EBA explicitly require to ensure full alignment between eligible liabilities and own funds.
Responses to this consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 31 August 2020.
A public hearing on this consultation will take place at the EBA premises in Paris on 24 June 2020 from 10:00 to 12:30 CET.
The EBA has updated the RTS on own funds, in accordance with the original RTS mandates granted to the EBA under Articles 28(5), 29(6), 52(2), 76(4), 78(5) and 79)2) of Regulation (EU) No 575/2013 (‘CRR’). The draft amended RTS related to eligible liabilities have been developed in accordance with Articles 72b(7) and 78a(3) CRR.