Question ID
2016_2958
Legal act
Directive 2014/59/EU (BRRD)
Topic
Write-down and conversion of capital instruments
Article
60
Paragraph
1
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n.a.
Type of submitter
Competent authority
Subject matter
Difference between a reduction and a write-down
Question

What is the difference between reduction and a write-down in Article 60(1)?

Background on the question

According to Article 60(1) of Directive 2014/59/EU (BRRD), “[…] (a) Common Equity Tier 1 items are reduced first in proportion to the losses and to the extent of their capacity and the resolution authority takes one or both of the actions specified in Article 47(1) in respect of holders of Common Equity Tier 1 instruments; (b) the principal amount of Additional Tier 1 instruments is written down or converted into Common Equity Tier 1 instruments or both, to the extent required to achieve the resolution objectives set out in Article 31 or to the extent of the capacity of the relevant capital instruments, whichever is lower; (c) the principal amount of Tier 2 instruments is written down or converted into Common Equity Tier 1 instruments or both, to the extent required to achieve the resolution objectives set out in Article 31 or to the extent of the capacity of the relevant capital instruments, whichever is lower.” It is not clear what exactly the difference between a reduction and a write-down is.

Submission date
Rejected publishing date
Rationale for rejection

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Status
Rejected question