Question ID
2013_256
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Supervisory reporting - COREP (incl. IP Losses)
Article
99
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
Article/Paragraph
Annex II, Part II, Par. 1.2. (C01.00 - Own funds)
Type of submitter
Consultancy firm
Subject matter
Does the "Excess of deduction from AT1 items over AT1 Capital" used for the calculation of the 17.65% threshold include the transitional additions for grandfathered instruments and instruments issued by subsidiaries
Question

When calculating the applicable 17.65% threshold, is the "Excess of deduction from Additional Tier 1 (AT1) items over AT1 Capital" (Article 36(1)(j)of Regulation (EU) No 575/2013 (CRR)) supposed to be adjusted for the transitional adjustments made earlier in the process for grandfathered instruments and instruments issued by subsidiaries?

Background on the question

In Art. 48(2)(a) of CRR it is stated that for the calculation of the 17.65% threshold, the adjustments and deductions in Articles 32 to 36 must be applied in full. Hence, the excess as indicated in Art. 36(1j) must also be deducted prior to the calculation of the threshold. However, the instructions on C 01.00 rows 740 "Excess of deduction from AT1 items over AT1 Capital (deducted in Core Equity Tier 1 - CET1)" and 970 "Excess of deduction from Tier 2 items over Tier 2 Capital (deducted in AT1)" indicate that for the calculation of these rows, the transitional amounts for grandfathering (rows 660 and 880 ) and instruments issued by subsidiaries (rows 680 an 900) must be included.

Submission date
Final publishing date
Final answer

As explained in Annex II. Part 2, paragraph 13(a) of the Regulation (EU) No 680/2014 13 ITS on supervisory reporting of institutionsDraft ITS on Supervisory reporting, the adjustment effects of the transitional provisions are shown only in nine rows in C 01.00 in aggregated terms. Paragraph 13(b) clarifies that transitional provisions may also indirectly affect the AT1 and T2 shortfalls (referred to in Articles 36(1) (j) and 56(e) of Regulation (EU) No 575/2013 (CRR)), reported in rows 740 and 970. As a consequence, the content of those rows cannot directly be considered for the calculation of the threshold in Article 48 of CRR during the transition period. After the transition period, the amounts in rows 740 and 970 will no longer include the effects of transitional adjustments.

The 17.65% threshold has to be reported separately in template C 04.00, row 210. Please note that there are no validation rules linking this row with rows of the C 01.00 template.

 

*As of 1/8/2014 the content of this answer was modified to reflect the publication of the final ITS on supervisory reporting of institutions in the Official Journal of the European Union. As a result, the references to the ITS were updated and the disclaimer deleted. For reasons of transparency, revisions are highlighted in track changes.

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.

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.