2013_527 Grandfathered Instruments and Deduction Threshold Exemptions

Question ID:: 2013_527
Legal Act:: Regulation (EU) No 575/2013 (CRR)
Topic:: Own funds
Article:: 46, 48, 470
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:: Not applicable
Article/Paragraph:: N/A
Disclose name of institution / entity:: No
Type of submitter:: Credit institution
Subject Matter:: Grandfathered Instruments and Deduction Threshold Exemptions
Question:: When calculating the amount of Common Equity Tier 1 (CET 1) that is multiplied by 10%/17.65% for the purposes of threshold exemptions for deductions, should grandfathered instruments be included in the amount of CET1 to the extent that they qualify as CET 1 during the grandfathering period?
Background on the question:: For example, if an institution had €10bn CET 1 (post deductions) excluding grandfathered instruments and had an additional €2bn grandfathered CET 1 that was eligible as a State aid instrument under Article 483 (or other instrument under Article 484), should the 10% threshold come to €1bn or €1.2bn until 31 December 2017?
Date of submission:: 13/11/2013
Published as Final Q&A:: 30/04/2014
Final Answer:: Common Equity Tier 1 (CET1) instruments that are eligible for grandfathering under Articles 483 and 484 of Regulation (EU) No. 575/2013 may be included in CET1 items for the purposes of calculating thresholds for exemptions from deduction.
Status:: Final Q&A
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.