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Q&As refer 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.

Please note that the Q&As related to the supervisory benchmarking exercises have been moved to the dedicated handbook page. You can submit Q&As on this topic here.

List of Q&A's

C 02.00 OWN FUNDS REQUIREMENTS CA2 - Row 0585

Hello,   As a bank reporting software company, we would like more information about FRTB.   In the Reporting framework 4.0, for Corep, for the template : C 02.00           OWN FUNDS REQUIREMENTS   CA2 We have a question about the row “0585- 1.3.4 Risk exposure amount for on- and off-balance sheet subject to market risk of entities applying only the Alternative Internal Models Approach (AIMA) or a combination of AIMA and ASA” There is a mention “See MKR AIMA SUM” in the “2.2 Annex II - Part II - Capital adequacy”   But the template “C 95.00     Alternative internal model approach: Summary of own funds requirements            MKR AIMA SUM” is postponed to 2026.   Can we conclude that this row is empty for 2025 ?   Thanks in advance,   Regards

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Inclusion of Interim profits in CET1 ratio at half year

At the half year, where an institution has accrued for an interim cash dividend in line with its approved dividend policy and the policy also allows for the distribution of excess capital at the discretion of its Board, is the institution also required to deduct for a potential full year share buyback in its half year CET1 ratio where:  (i) its Board has not made any decision on an interim or full year share buyback and its distribution policy does not formally commit the institution to an interim / full year share buyback;  (ii) no share buyback application has been made to the ECB;  (iii) no explicit guidance on the quantum of a share buyback has been given to the market (at either the HY or FY), and therefore undistributed capital is fully available for use in H2 to cover unexpected risk or losses should they occur

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

Specification and operationalisation of the phrase "at all times"

How is the wording in Article 92 (1) CRR to be understood with regard to compliance with own funds requirements “at all times” in terms of verifiability?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Permission to reduce AT1, Tier 2 or eligible liabilities instruments and deduction rules in the context of a liability management exercise without replacement.

When should deductions from own funds and eligible liabilities be applied in the context of a liability management exercise without replacement (i.e. a tender offer)? When can the unredeemed part of own funds or eligible liabilities be included in own funds or eligible liabilities again?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

recognision of own funds

Can the Common Equity Tier 1 items, namely „capital instruments, provided that the conditions laid down in Article 28 or, where applicable, Article 29 are met“(CRR Art 26 (1) (a)) and „other reserves“ (CRR Art 26 (1) (e)) be recognised as CET1 capital if there are features preventing its funds from use?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

The SA exposure class (CRR Art 112) of the exposure amounts with an LTV ratio between 80% and 100%: secured or unsecured?

Art 125(2)((d) splits the secured part of a exposure secured by mortgages on immovable in a part with an LTV ratio lower than 80%, to which the 35 % risk weight is assigned, and a remaining part. The remaining part has an LTV ratio between 80% and 100% and gets the same treatment as the unsecured part. But should it still be considered a secured part of the exposure under art 112(i)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2021/451 – ITS on supervisory reporting of institutions

Applying adjustments and deductions in Article 36 in full

In Article 48(2)(a) of Regulation (EU) No 575/2013 (CRR) it states: 'the residual amount of Common Equity Tier 1 items after applying the adjustments and deductions in Articles 32 to 36 in full and without applying the threshold exemptions specified in this Article;' Question: When applying the adjustments and deductions in Articles 32 to 36 in full should be deducted the value of deferred tax assets and significant investments?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

clarification which EBA Q&A to apply: EBA Q&A 2017_3277 or EBA Q&A 2023_6791

clarification which EBA Q&A to apply: EBA Q&A 2017_3277 or EBA Q&A 2023_6791

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

Ability of the Share Premium to absorb losses

Can the Share Premium be recognised as CET1 capital if there are features preventing its use to absorb losses?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Corep reporting C 34.06 – Top 20 counterparties - validation rule EBA_v10236

Concerning the Corep reporting C 34.06 – Top 20 counterparties, further clarification is required for validation rule EBA_v10236.Row 0040 (Sector of the counterparty) specifies that one sector must be chosen for each counterparty based on the following FINREP economic sector classifications: (i) x10 Central Banks ; (ii) x1 General Governments; (iii) x12 Credit institutions; (iv) x599 Investment firms as defined in Article 4(1), point (2) of Regulation (EU) No 575/2013; (v) x598 Other financial corporations (excluding investment firms); (vi) x20 Non-financial corporations.However, some counterparties in our EQ options are individuals (households) and do not fall under any of the codes allowed . How to meet the requirements of validation rule EBA_v10236 for the household sector among the 20 largest exposures due to counterparty credit risk?which of the values ('x10', 'x1', 'x12', 'x598', 'x599', 'x20') should be used for physical persons as reporting 'x5-households'  defined in CT16_1 is not permitted?or maybe households are not in a scope of reporting and should be excluded from the table?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 1423/2013 - ITS on disclosure of own funds requirements

Taps on callable Eligible Liabilities

If a subsequent tap of a callable MREL-eligible instrument (Senior preferred or Senior non-preferred instrument) is priced at a spread higher than the secondary market (i.e., the investor buys the new tap below par) in order to align the tap spread to the initial credit spread and the reset spread (following the tightening of the spreads of the initial tranche in the secondary market), would the reset of the margin at the first call date to the initial spread of the original issue be considered an incentive to redeem as per Article 20 of EBA RTS for Own Funds and Eligible Liabilities requirements for institutions? In case of the presence of an incentive to redeem, would this result in a shortening of maturity of eligible liabilities as per Article 72(c)(3) of the CRR for the tap only or for the full instrument (i.e., both the tap and the original instrument?).

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

Definition of elligible capital

Can a parent company give a guarantee to investors of new shares in a bank and back it with their own assets? Or can a sister company invest in a bank? Can a bank lend to a company that already holds AT1 instruments of a bank? If so, is there a deduction? What if that company's investment in the bank is not a significant proportion of its portfolio and the bank's failure would not jeopardise the loan? What if the bank lends to a company that will use the loan to buy the bank's planned issue of AT1 instruments, but the loan is backed by high quality collateral?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Deductions from Common Equity Tier 1 items

1. Bank owns usd 20 million worth of 18% ordinary shares of a financial institution Alpha Bank. Alpha Bank has also invested usd 12 million to this bank's CET1 in order to artificially inflate the capital of both banks.  When calculating regulatory capital, USD 12 million reciprocal cross-holding was deducted from CET1. Now, when the bank calculates adjustments for investments in the capital of financial entities, should it count the investment in Alpha Bank as 8 million, and even if so, will it be considered a significant investment or an insignificant investment? 2.  Bank has a wholly owned subsidiary, Valeria Ltd, which is a non-financial entity. Valeria Ltd holds 100% of the shares of Karina Insurers, which is a financial institution. Should the bank now consider this as a significant investment (here indirect) in a financial institution and make deductions accordingly, or should the bank consider only Valeria Ltd in deductions (alternatively 1250% RW) as a qualifying non-financial holding? If the first option is the correct answer, should it ignore the investment in Valeria Ltd? 3.  A bank has 100 million CET1 and 10 million AT1 capital. The bank then invests 50 mln to buy 100% of an insurance company that holds the bank's 10 mln AT1. When recalculating the regulatory capital, the bank deducts 40 mln (50 - 100*10%) from CET1 as an investment in financial sector entities above the 10% threshold. Now, when calculating AT1, should the bank make an adjustment to 10 mln AT1 because it is considered an investment in own capital? If so, how much?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Adjustment of risk-weighted non-defaulted SME exposures

Should the RWEA to which the adjustment shall be made under CRR Article 501 constitute the total RWEA for credit risk determined in accordance with Part Three, Title II, Chapter 2 or 3 that relates to non-defaulted credit exposures defined in 501 p 2 - regardless if the RWEA stems from the standardized approach, the IRB approach or any national measures impacting the credit risk RWEA?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Share buybacks included in distribution policies

How and when should the share buyback ordinary component of an adopted profit distribution policy be reflected in the CET1 capital of institutions?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

Share buyback program: amount of upfront deduction

Does the upfront deduction under Article 28(2) of Commission Delegated Regulation (EU) No 241/2014 as specified by Q&A 3277 include in addition to CET1 instruments and related share premium accounts also the other CET1 items that are reduced by a share buyback program authorized pursuant to Article 78(1)(b) CRR?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

Definition of financial institution and mixed activity insurance holding company

Can a mixed-activity insurance holding company (MAIHC) that has at least one subsidiary credit institution pursuant to Article 4(1)(1) CRR qualify as a financial institution pursuant to Article 4(1)(26) CRR?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Minority interests ( COREP & Net Stable Funding Ratio)

Are minority interests that arise from a subsidiary, which is a (Mixed) financial holding company in a third country and has obtained exemption for the prudential consolidation from the local regulator, eligible to inclusion in the EU parent entity consolidated? Can parent entity choose to apply CRR articles 84(2)/87(2) to exclude the minority interest of the subsidiary with potential negative equity ? What should be the treatment of the minority interest of the subsidiary with potential negative equity in the NSFR report of the parent entity?   

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Deferred tax assets related tax loss due to losses on derivatives in cash flow hedge accounting relationships

In accordance with Article 33(1)(a) CRR, institutions do not include fair value reserves related to gains or losses on cash flow hedges in own funds. Is it correct to also filter deferred tax assets related to the tax loss resulted from fair value reserves related to gains or losses on cash flow hedges?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable