Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Own funds
489, 490 and 491
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Type of submitter:
Credit institution
Subject Matter:
Application of transitional provisions to Additional Tier 1 and to Tier 2 instruments with an incentive to redeem

When all the call options from an AT1 (or T2) instrument which has an incentive to redeem occur during the period that an institution is under state aid and, thus, subject to a ban on exercising call options on own funds instruments, should the AT1 (or T2) instrument be subject to the provisions of Article 489(5) (or 490(5) of Regulation (EU) No 575/2013 (CRR) assuming that the effective maturity date, as defined in Article 491, is the first call date after the referred ban has been removed?

Background on the question:

When an institution receives state aid the European rules on competition policy, including DG COMP decisions, imply that this institution is subject to a ban on exercising any call options on its own funds instruments. If there is an AT1 (or T2) instrument with an incentive to redeem for the call options that might occur after the imposition of this ban it should be considered that, in fact, the institution is not able to exercise the call options. Thus, the call option implied in Article 489(5)(a) (or 490(5)), and analogously its effective maturity date, can be viewed as the first call option that occurs after the ban has been removed. This implies that the instrument has its recognition reduced in accordance with Article 484(4) (or 484(5)) until the date of their effective maturity.

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

Articles 489(5) and 490(5) refer to cases where the institution "was able" to exercise a call after a certain date. Where the institution was not able to exercise any such call with regard to the respective instrument before 1 January 2013, Article 489(5) and 490(5), respectively, will apply.

The ability to exercise a call should be assessed only against legal constraints applying to the banks which are outside of the control of the institution (i.e. excluding amendments to the contract of the instrument) and not encompass economic or other considerations. The impossibility to exercise the call (during the whole period between 31 December 2011 and 1 January 2013) due to state aid rules may indeed be interpreted as a legal obstacle which is relevant for the purposes of Article 489(5)(a) for determining whether the institution was able to exercise the call.

Article 491(a) refers to the date of the first call date of an instrument with an incentive to redeem occurring on or after 1 January 2013. Since Article 491(a) explicitly defines effective maturity for the purpose of Articles 489 and 490, it should be read in conjunction with those Articles. Therefore, a call date should be interpreted as a date on which an institution was able to exercise a call.


This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate-General of the Commission (Directorate General for Internal Market and Services) 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).