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Breadcrumb

  1. Home
  2. Single Rulebook Q&A
  3. 2023_6713 Recognition of minority interest of a subsidiary subject to own funds requirements on individual level
Question ID
2023_6713
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Own funds
Article
84, 85, 87
Paragraph
2
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
-
Type of submitter
Competent authority
Subject matter
Recognition of minority interest of a subsidiary subject to own funds requirements on individual level
Question

Can minority interests of a subsidiary be recognised, if the respective subsidiary is only subject to own funds requirements on individual level, but not on sub-consolidated level?

Background on the question

In Q&A 3567 it was clarified, that in order to recognize minority interests, an own funds requirement needs to be set at the respective level of consolidation. Subsequently, the question arose, whether this own funds requirement is necessary on a sub-consolidated basis or whether an own funds requirement on individual level suffices. 
Consider a group comprising of three levels: If the institution at level 2 is subject to own funds requirements on a sub-consolidated basis and sub-consolidates its subsidiary at level 3, minority interests from those levels can be recognized at level 1. However, if the institution at level 2 is only subject to own funds requirements on an individual level, two things have to be clarified:
First, whether sub-consolidation at level 2 is a precondition for recognizing minority interests at level 1, or if an own funds requirement on individual level of the institution at level 2 is sufficient in order to include minority interests at level 1.
Second, if the latter is the case, are only minority interests arising from level 2 eligible for inclusion or also minority interests arising from level 3 (which in turn has its own funds requirement on individual level).  
These questions do not only concern minority interests but also the qualifying Tier 1 instruments included in consolidated Tier 1 capital according to Art. 85 (2) CRR as well as qualifying own funds included in consolidated own funds according to Art. 87 (2) CRR.
 

Submission date
09/02/2023
Status
Question under review
Answer prepared by
Answer prepared by the European Commission because it is a matter of interpretation of Union law.

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