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Breadcrumb

  1. Home
  2. Single Rulebook Q&A
  3. 2024_7029 recognision of own funds
Question ID
2024_7029
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Own funds
Article
26 and 28
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
own funds
Type of submitter
Competent authority
Subject matter
recognision of own funds
Question

Can the Common Equity Tier 1 items, namely „capital instruments, provided that the conditions laid down in Article 28 or, where applicable, Article 29 are met“(CRR Art 26 (1) (a)) and „other reserves“ (CRR Art 26 (1) (e)) be recognised as CET1 capital if there are features preventing its funds from use?

Background on the question

Newly established Institution’s funds for capital formation had been accumulated in a temporary accumulative account opened with a credit institution. From these funds Institution had formed its capital items: 1) share capital (item in Art 26(1) point (a)) which in accordance with the requirements of the legislation was registered in the Register of Legal Entities and 2) capital reserves (item in Art 26(1) point (e)). Right after the formation of capital instruments, the ownership of the funds kept in the credit institution’s account was temporarily restricted by order of the law enforcement institution. Nevertheless, shortly after the restriction came into force, the ownership of Institution had changed, so share capital instruments have been transferred to another shareholder. The period of restriction has now been in place for 4 years. Thus, the Institution cannot dispose of the funds withheld for a prolonged period; also, there remains a great uncertainty regarding the period of restriction and it is impossible to predict it’s outcome. According to national accounting standards, those funds in Institution’s balance sheet should be regarded as an asset. 

Submission date
01/03/2024
Rejected publishing date
15/03/2024
Rationale for rejection

The question is not relevant for a broad set of stakeholders, for a large number of stakeholders, for broad range of different stakeholders, or for a wide geographical distribution of stakeholders.

Moreover, the EBA guidance or clarification is not needed with regard to the issue that it raises. For example, this can be the case where it is considered that the existing regulatory framework is sufficiently clear and unambiguous, or where different practices may be possible but it is not currently necessary to harmonise these further through the Q&A process.

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.

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

Status
Rejected question

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