Question ID
2018_4416
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Own funds
Article
63
Paragraph
j
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
na
Type of submitter
Investment firm
Subject matter
Own funds
Question

Article 63 j) of CRR states that "the instruments or subordinated loans, as applicable, may be called, redeemed or repurchased or repaid early only where the conditions laid down in Article 77 are met, and not before five years after the date of issuance or raising, as applicable, except where the conditions laid down in Article 78(4) are met". If an institution has a right of early redemption (not connected to the conditions laid down in Article 78(4)) which is effective five years after issuance but which has to be notified at least two years before redemption, is the instrument eligible as Tier 2 Capital ?

Background on the question

Some instruments have very long prior notification periods before redemption, which means that the bank must take the irrevocable decision to call the instrument e.g. two years before redemption. It is important to know if an instrument for which the bank can take the decision to call three years after issuance, but then only redeems five years after issuance, is eligible as Tier 2 capital (or Additional Tier 1 capital.)

Submission date
Rejected publishing date
Rationale for rejection

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Status
Rejected question