Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Supervisory reporting
35; 468
2 (for Art. 468)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Name of institution / submitter:
European Savings Banks Group
Country of incorporation / residence:
Type of submitter:
Credit institution
Subject Matter:
Treatment of unrealised gains under the Common Equity Tier 1 (CET1) - unintended consequences due to a double deduction.

What can be done to avoid the double deduction from CET1 that will be required in 2014?

Background on the question:

Article 35 of Regulation (EU) No 575/2013 (CRR) states that institutions shall not make adjustments to remove from their own funds unrealised gains or losses on their assets or liabilities measured at fair value (except in relation to a few exceptions outlined in article 33). Article 468, by way of derogation from Article 35, implements this in a phased approach from 1 January 2014 to 31 December 2017 where the period 1 January – 31 December 2014 requires that 100% of unrealised gains measured at fair value are deducted. The aforementioned provision entails a deduction of the unrealised gains that may overlap throughout 2014 with the deduction provided for in CRR Article 46, of holdings of own funds instruments exceeding 10% of the institution’s CET 1 capital. Such overlap incurs a double deduction of the impacted banking book items. This treatment of unrealised gains throughout 2014 will cause a large dip in the own funds of several banks’, e.g. for a number of Swedish Savings Banks who, despite being very well capitalised according to the rules applicable during 2013, and from 2015 onwards, will face unnecessary prudential constraints during 2014.

Date of submission:
Published as Final Q&A:
Final Answer:

Since a double deduction in this case seems to be neither intended nor warranted from a prudential point of view, the following treatment is deemed appropriate:

For the purposes of Article 46 of Regulation (EU) No 575/2013 (CRR), the accounting values of non-significant investments in Common Equity Tier 1, Additional Tier 1 and Tier 2 instruments shall be reduced by the unrealised gains which have to be filtered out according to Article 468. Any unrealised gains not filtered out will remain included in the accounting value for the purpose of Article 46. Furthermore, the unrealised gains filtered out according to Article 468 of the CRR shall also not be included in the aggregate amount of Common Equity Tier 1 items referred to in Article 46.


This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Financial Stability, Financial services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Final Q&A
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Note to Q&A:

Update 26.03.2021: This Q&A has not yet been reviewed by the European Commission in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).