A Tier 2 instrument issued by a non-EU subsidiary (and subscribed by third parties) may be included in the consolidated own funds of the EU parent company provided it fulfils the conditions laid down in Article 63 of Regulation (EU) No 575/2013 (CRR). The CRR does not require that a Tier 2 instrument issued by a non-EU subsidiary be eligible only if it is also qualified as such by the laws/supervisor of the third country where the subsidiary is established. The reference in Article 87 of the CRR to "any additional local supervisory requirement in third countries" is relevant for the purpose of determining the amount of qualifying own funds of the subsidiary that is included in consolidated own funds. It does not introduce an additional feature for Tier 2 instruments issued by non-EU subsidiaries that would make the eligibility of those instruments dependent upon recognition as such under that third country law/by the third country supervisor. It is not possible to infer from Article 87 that the third country assessment should prevail over the assessment of the instruments in accordance with the CRR. It is the duty of the parent undertaking, in accordance with Article 11(1) CRR, to ensure that subsidiaries not subject to the CRR implement arrangements, processes and mechanisms to ensure a proper consolidation. Should European supervisors - given the non-recognition by the third country authorities - have any doubt as to whether the Tier 2 instrument issued by the non-EU subsidiary meets the CRR requirements, they should raise the issue with the local non-EU supervisory authority, as part of their duty of coordination and cooperation with third country supervisors. DISCLAIMER This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Financial Stability, Financial services and Capital Markets Union) 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.