2013_588 Application of specific national filters and deductions when computing threshold deductions

Question ID:

2013_588

Legal Act:

Regulation (EU) No 575/2013 (CRR)

Topic:

Own funds

Article:

481

Paragraph:

COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:

Not applicable

Article/Paragraph:

Disclose name of institution / entity:

Type of submitter:

Credit institution

Subject Matter:

Application of specific national filters and deductions when computing threshold deductions

Question:

When applying the transitional provisions calculation of Common Equity Tier 1, the threshold deductions exist: (a) associated with non-significant holdings in financial sector entities (FSE) which are covered by Articles 36(1)(h) and 46 of Regulation (EU) No 575/2013 (CRR); and, (b) the ones associated with the significant holdings in FSE and Deferred Tax Assets that arise from temporary differences that are covered in article 470 of CRR. Both take into account theoretical values for a “relevant Common Equity Tier 1” (or “aggregate amount of Common Equity Tier 1” in the wording of 46(1)(a) of CRR which serves as a base for the calculation of the threshold that determines the deductions arising from these assets. Assuming there are specific national deductions and filters subject to transitional provisions to be applied at the Common Equity Tier 1 level pursuant Article 481, how should these be incorporated when determining the “relevant CET1” for the thresholds calculations in both cases?

Background on the question:

This issue influences the computation of the capital ratios according to transitional measures.

Date of submission:

29/11/2013

Published as Final Q&A:

08/05/2014

Final Answer:

Article 481(1) of Regulation (EU) No 575/2013 (CRR) provides for a general derogation from Articles 32 to 36 of the CRR (Prudential Filters and Deductions) from Common Equity Tier 1 (CET 1) capital until 31 December 2017.

The calculation of the "aggregate amount of Common Equity Tier 1" according to Article 46(1)(a) of the CRR and the "relevant Common Equity Tier 1 items" according to Article 470(1) of the CRR both include a reference to Articles 32 to 35 and certain elements mentioned in Article 36. Therefore, where institutions are required to make additional adjustments to CET 1 items according to Article 481(1), these shall also be taken into account for the purposes of calculating the "aggregate amount of Common Equity Tier 1" according to Article 46(1)(a) of the CRR and the "relevant Common Equity Tier 1 items" according to Article 470(1) of the CRR.

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.