COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
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Recognition of Additional Tier 1 and Tier 2
Article 92 of Regulation (EU) No 575/2013 introduces minimum ratios for CET 1 (4,5 %), Tier 1 (6%) and total capital (8 %). Setting aside any buffer requirements, this means that an institution that holds a total capital ratio of 8% can have at most:
- 18,75 % of AT 1 capital, and
- 25% of Tier 2 capital,
as a percentage of its total regulatory own funds.
Are these percentages a cap for the recognition of AT 1 and Tier 2 in regulatory capital that may not be exceeded at any time regardless of the capital ratio the institution actually holds (similar to what is currently set out in Article 66 of Directive 2006/48/EC (Capital Requirements Directive)) or does the Regulation (EU) No 575/2013 repeal the gearing limits used in Directive 2006/48/EC (Capital Requirements Directive), giving institutions freedom to decide on the composition of their regulatory capital as long as they meet the minimum requirements mentioned in Article 92?
Background on the question:
Date of submission:
Published as Final Q&A:
Additional Tier 1 instruments and Tier 2 instruments can be taken into account in total own funds without limits under Regulation (EU) No 575/2013
Answer prepared by:
Answer prepared by the EBA.
Note to Q&A:
Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.