Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Own funds
52 / 63 / 72b
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Type of submitter:
Credit institution
Subject Matter:
Clause of substitution of investor or remarketing for capital or internal MREL

In the context of a bond issued by a subsidiary to the parent company recognized as Own Funds or Eligible Liability, would it be possible to insert a clause of change of control that would allow the parent company, if it is no longer the owner of the subsidiary, to automatically sell the bond to the purchaser of the subsidiary?

Background on the question:

In the past few years, we have seen an increase in the number of M&A transactions in the banking space, which is consolidating. Some banks have been for instance look at selling some subsidiaries. In this context, it would not make sense for the bank to remain the holder of internal Own Funds or Eligible Liability instruments once it is no longer the parent company. It would be therefore interesting to explore options to organize the substitution of the seller by the buyer of the subsidiary.

Date of submission:
Published as Rejected Q&A
Rationale for rejection:

This question has been rejected because the issue it raises is beyond the remit of the Q&A process and as such it cannot be addressed via a Q&A. The issue will be answered in the monitoring report on TLAC-MREL instruments.

The Single Rule Book Q&A tool has been established to provide explanations and non-binding interpretations on questions relating to the practical application or implementation of the provisions of legislative acts referred to in Article 1(2) of the EBA’s founding Regulation, as well as associated delegated and implementing acts, and guidelines and recommendations, adopted under these legislative acts. The Q&A process cannot, for example, consider issues which would require changes to the regulatory framework.

For further information on the purpose of this tool and on how to submit questions, please see “Additional background and guidance for asking questions”.

Rejected question