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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.

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List of Q&A's

Meaning of ‘pure industrial holding company’ in the definition of financial institution.

How should the term ‘pure industrial holding company’ be understood in the context of the definition of ‘financial institution’ in accordance with article 4(1)(26) CRR? Would a holding company, the investments of which are exclusively outside of the financial sector, qualify as ‘purely industrial’ for the purposes of that definition?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2021_5798
  • Topic: Own funds
  • Date of submission:

CET 1 Minority Interest Calculation and Forex conversion of non-EU subsidiary’s financial statements

Regarding minority interests calculations: 1) Should the Common Equity Tier I items of the subsidiary referred to in Article 81(1) and 84(1)(a) CRR be calculated according to the local accounting framework or according to the consolidated applicable accounting framework, when the two frameworks differ? 2) Should the Other Comprehensive Income that arises from the currency conversion of the local financial statements to the Group’s reference currency be considered in the minority interest computation?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2021_5795
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 31/03/2023

Applicability of fix amount dividend policy to mutuals, cooperative societies, saving institutions and similar institutions

Is Q&A 4731 applicable to mutuals, cooperative institutions, savings institutions and similar 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
  • ID: 2021_5787
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 11/02/2022

Calculation of the insufficient coverage for NPEs and capital absorptions related to Pillar 1 requirements on the same exposure

Regarding the applicable amount of the insufficient coverage to be deducted from own funds as per Article 36 (1) (m) CRR, to be determined at exposure level according to Article 47c(1) (b) of Regulation (EU) 2019/630, should the credit institutions applying the IRB approach consider the Pillar 1 capital absorptions already computed for credit risk for the calculation, on the same exposure, of the applicable amount to be deducted from CET 1 as per above, precisely to avoid any double-counting?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2021_5739
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 31/05/2022

Early repayment upon a common agreement between the issuer and the subscriber

Is a clause in provisions governing the capital instruments allowing that the parties (issuer and the investor) may mutually agree to have the issuer repay, at any time, but not before five years after the date of issuance, totally or partially, the principal amount of the capital instrument compliant with the eligibility criteria for own funds instruments?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2021_5720
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 15/07/2022

Eligibility of minority interests

When it comes to subsidiaries which are institutions or investments firms established in third countries, are minority interests eligible for the purpose of their recognition in prudential own funds as per Article 81 (for CET1) or Article 82 (for AT1 and T2)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2021_5711
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 03/12/2021

Prudential filter on unrealised gains and losses corresponding to exposures to governments, local authorities and public sector entities and its interaction with hedging activities

Should institutions, remove from the calculation of their Common Equity Tier 1 items, the amount of unrealised gains and losses resulting from hedging the interest rate risk arising from exposures within the definition of paragraph 1of Article 468?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2021_5683
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 26/01/2023

Simultaneous applicability of non-deduction exemptions under Articles 48 and 49 CRR regarding equity exposures on insurance holdings where an institution has a significant investment

For an institution that has received permission to apply Article 49(1) CRR, has a significant investment below or equal to the threshold indicated in Article 48(1) and 48(2) (exempted from being deducted from Common Equity Tier 1 according to Article 49(1), are the amounts of holdings in insurance undertakings, to be risk-weighted at 250% according to Article 48(4) and the amounts of such holdings that are above this threshold risk-weighted in line with Article 49(4)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5664
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 11/02/2022

Consent solicitation to change the contractual ranking of an instrument to avoid so-called “infection risk“ posed by legacy instruments

Would a consent solicitation to amend the T&Cs of a legacy capital instrument (Tier 1 or Tier 2) in order to ‘promote’ an instrument in the subordination hierarchy entail the instrument to be deemed as a new issuance?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5653
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 22/02/2022

Adding to own funds the unredeemed part of own funds.

When and under what conditions can the unredeemed part of own funds, for the redemption of which an institution had previously obtained a general prior permission from the competent authority in accordance with Article 77 and the second subparagraph of Article 78(1) of Regulation (EU) No 575/2013 (CRR), be included in own funds 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
  • ID: 2020_5615
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 24/02/2023

Interplay between Article 13a of Commission Delegated Regulation (EU) No 241/2014 as regards the deduction of software assets from Common Equity Tier 1 (CET1) items and Article 37(a) of Regulation (EU) No 575/2013 (CRR)

Would it be possible that the application of Article 37(a) of the CRR in conjunction with the new deduction rules established in Article 13a of the Commission Delegated Regulation (EU) No 241/2014 could lead to: • A negative deduction, i.e. an addition, of software assets when it comes to the determination of CET1 items, and/or • A non-adequate amount to be risk weighted?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5567
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 26/02/2021

Definition of qualifying holding according to Article 4 (1) 36 CRR2

If a credit institution holds a participation below 10% in a company outside the financial sector - which according to the applicable accounting framework (IFRS) is accounted for by use of the equity method, due to the exercise of a significant influence according to IAS 28.5. - does this constitute a case of significant influence and therefore a qualifying holding according to Article 4(1)36 CRR? Can situations arise where a significant influence exists under accounting rules, but not according to the CRR definition?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5291
  • Topic: Own funds
  • Date of submission:

Eligibility of convertible bonds for MREL

Would a convertible bond (Senior Non Preferred, Senior Preferred or Senior HoldCo) be deemed a structured note for the purpose of MREL eligible liabilities and therefore be excluded from MREL?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5265
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 30/03/2023

Consent solicitation to introduce a contractual recognition of bail-in in Terms of Conditions (T&Cs) of capital instruments and MREL eligible liabilities

Would a consent solicitation to amend the T&Cs of a capital instrument (AT1, Tier 2) or MREL eligible liability (Senior Non Preferred, Senior Preferred or Senior HoldCo) in order to introduce a contractual recognition of bail-in be deemed a ‘material change’, in which case the amended instrument would be deemed as a new issuance?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5227
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 22/02/2022

Is a financial counter-incentive which is triggered in case of a default of a borrower on certain specific contractual obligations considered as an incentive to redeem?

Would a subordinated loan agreement clause, under the terms of which contractual penalties or other similar financial counter-incentives are triggered in case of a default of a borrower on certain specific contractual obligations be considered a provision, which includes an incentive for the principal amount of the subordinated loan to be repaid prior to its maturity?

  • 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
  • ID: 2020_5202
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 24/09/2021

Deduction of software

Should software be deducted from own funds net of the whole amount of tax deductible amortisation that will be recorded throughout their life?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5171
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 22/12/2022

Continuous call option in AT1 instruments

Can AT1 instruments include terms whereby an issuer may call an instrument on any day over a fixed period of time (e.g. six months) before the first coupon reset date but after five years from date of issuance? Would the EBA’s answer be different for prospective Tier 2 or Article 72b CRR2 instruments (i.e. TLAC/ MREL eligible liabilities instruments)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5147
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 04/09/2020

Absence of waiver of set-off

Do AT 1 and Tier 2 instruments issued before 27 June 2019 continue to qualify as eligible AT 1 / Tier 2 capital despite the fact that it does not contain an explicit clause on waiver set-off rights in its terms and conditions, provided it meets all other eligibility criteria? Equally, does a liability issued before 27 June 2019 continue to qualify as eligible liabilities instrument despite the fact that it does not contain an explicit clause on waiver of set-off rights in its terms and conditions, provided it meets all other eligibility criteria of Article 72b CRR2?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5146
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 04/09/2020

Need of prior permission to include minority interest arising from Common Equity Tier 1 instruments issued by subsidiaries located in EU member state and third countries in consolidated CET1 capital of parent institutions established in the EU.

According to Article 26(3) CRR, as amended by Regulation (EU) 2019/876 (CRR2), is a prior permission by the competent authority required in order for a parent institution located in the EU to include in consolidated CET1 capital minority interests, arising from CET1 instruments, issued by subsidiaries located (a) in an EU Member State, or (b) in a third country? The answer should also clarify whether before granting a permission pursuant to Article 26(3) CRR (if such permission is required), the competent authority is required to consult the EBA (as per the third subparagraph of Article 26(3) CRR), as the instruments issued by the subsidiaries in third countries would not be included in the EBA CET1 instruments list.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5129
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 04/12/2020

Deduction of pledged own shares from Common Equity Tier 1 items

Should shares pledged to the issuing credit institution as collateral to secure a loan granted by the same credit institution to a customer be deducted from Common Equity Tier 1 items where, in case of default of the customer, the credit institution has the option to either appropriate the collateral or force its sale, bearing in mind that this does not affect the existence of a relationship between the value of the loan and the value of the shares?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2020_5128
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 15/07/2022