Question ID
2014_1071
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Own funds
Article
52, 63, 484
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions
Article/Paragraph
not relevant
Type of submitter
Credit institution
Subject matter
Treatment as own funds under Regulation (EU) No 575/2013 (CRR)
Question

Confirmation is sought that instruments that initially qualified for transitional treatment in a higher own funds category according to CRR transition rules in Articles 484ff, but for which documentation had to be altered to a lower own funds category as instructed by a court ruling following a litigation, are to be reported as fully compliant with that lower own funds category. More background information on the instruments will be made available directly to EBA.

Background on the question

Treatment of own funds instruments where terms and conditions were clarified and retrospectively altered as instructed by a Court ruling.

Submission date
Final publishing date
Final answer

Q&A 2013-16 indicates that "a material change in the terms and conditions of a pre-existing instrument shall be considered in the same way as the issuance of a new instrument", without distinguishing cases where these changes have been triggered by the institution or imposed by an external party, which should then apply similarly.

In order for the amended instrument to be reported as fully compliant with the lower own funds category, it would need to meet all CRR eligibility criteria for this category (in particular the absence of incentives to redeem).

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.

Disclaimer

The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.