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Inclusion of interim profits in CET1

After the competent authority (CA) granted a permission to include interim profits in CET1 on the basis of the Article 26(2) CRR, on what date do these interim profits become part of CET1 capital?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2018_3822| Topic: Own funds| Date of submission: 26/04/2018

Quantification of foreseeable dividends when the dividend policy is set as a fix amount

Which amount should be deducted from interim/year-end profits pursuant to Article 26(2) CRR if a bank has a dividend policy stating that a certain specified amount (i.e. x.xx €) should be paid per share?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2019_4731| Topic: Own funds| Date of submission: 20/05/2019

Inclusion of interim profits in CET1 on consolidated basis

1. Could the competent authority grant a permission for including interim profits on consolidated level without granting such permission on solo level? 2. How should the institution calculate the pay-out ratio of dividends calculating foreseeable dividends according to Article 2(7) of RTS 241/2014 while applying for inclusion of interim profits on consolidated level?  

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2018_3823| Topic: Own funds| Date of submission: 26/04/2018

Inclusion of interim profits in CET1

Could interim profits, which are not profits from the recent reporting period but from the previous one, be included in CET1 capital before the institution has taken a formal decision confirming the final profit or loss of the institution for the year on the basis of Article 26(2) CRR?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2018_3821| Topic: Own funds| Date of submission: 26/04/2018

Subsidiary repurchasing AT1 or Tier 2 instruments before five years from the date of issuance

1/ Could an institution’s subsidiary subject to prudential supervision purchase Additional Tier 1 or Tier 2 instruments issued by the institution before five years from the date of issuance of the instruments, given that this purchase would lead to a disqualification of the instruments? 2/ Could an institution’s subsidiary not subject to prudential supervision purchase Additional Tier 1 or Tier 2 instruments issued by the institution before five years from the date of issuance of the instruments, given that this purchase would lead to a disqualification of the instruments?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2017_3587| Topic: Own funds| Date of submission: 07/11/2017

Market making

1. Should short positions in own AT1 and/or T2 instruments be taken into account in the calculation of the predetermined amount for market making purposes (Article 29(3) Commission Delegated Regulation 241/2014)? 2. Should short positons in own AT1 and/or T2 instruments have an impact on the amount to be deducted pursuant to Article 28(2) Commission Delegated Regulation 241/2014 and EBA Q&A 1352?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2017_3568| Topic: Own funds| Date of submission: 20/10/2017

Taxonomy 2.7.0.1 Validation Rules on FINREP 12.01

According to rule v5054_m, the total of the stage one allowance is limited to the provision for expected losses on household exposures only. Should this rule be superseded by v5554_h? Using the former rule will understate the true amount of the allowance.

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2018_3673| Topic: Supervisory reporting - FINREP (incl. FB&NPE)| Date of submission: 20/01/2018

Deduction requirements in accordance with Article 36(1) (f), (h) and (i) CRR: Netting of long and short positions in intermediate entities in the context of Article 15e (7) of Delegated Regulation (EU) No 241/2014 (“RTS Own Funds”)

Can an institution, in applying Article 15e (7) of Delegated Regulation (EU) No 241/2014 for the purpose of fulfilling the deduction requirements in accordance with Article 36(1) (f), (h) and (i) CRR – provided that all the conditions of Article 42 CRR are met - net long positions in an intermediate entity (such as an ETF) with corresponding short positions?  

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2017_3543| Topic: Own funds| Date of submission: 05/10/2017

Commitment to buy newly issued shares and synthetic holding deduction

What would be the prudential treatment applicable to a financial instrument where a bank commits itself to buy newly issued shares of an insurance company for a given amount should certain events occur?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2017_3292| Topic: Own funds| Date of submission: 12/05/2017

Clarification of the conditions for reduction of own funds due to Article 77 CRR and Article 28 RTS on Own funds.

Should deductions from own funds with regard to a permission to reduce own funds in accordance with Article 77 of Regulation (EU) No 575/2013 (CRR) be made right after the permission from the competent authority (CA) is granted or could it be later at the time of the institution’s public announcement in accordance with Article 28 (2) of the RTS on Own Funds? In that context, how should the concept of ‘sufficient certainty’ of Article 28 (2) RTS be applied?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2017_3277| Topic: Own funds| Date of submission: 28/04/2017

Taps on callable instruments

If a tap of an instrument is priced at a lower credit spread than the initial spread of the original issue, would the reset of the margin at the first call date to the initial spread of the original issue be considered an incentive to redeem as per Article 20 of EBA RTS for Own Funds requirements for institutions?If a tap of an instrument is priced at a lower credit spread than the initial spread of the original issue, would the reset of the margin at the first call date to the initial spread of the original issue be considered an incentive to redeem as per Article 20 of EBA RTS for Own Funds requirements for institutions?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2016_2848| Topic: Own funds| Date of submission: 28/07/2016

Instrumenty w Tier II / Tier 2 instruments and incentives to redeem or repay subordinated bonds prior to their maturity.

Original question Artykuł 63 lit. h) Rozporządzenia Parlamentu Europejskiego i Rady (UE) nr 575/2013 z dnia 26 czerwca 2013 r., stwierdza, że aby instrumenty kapitałowe i pożyczki podporządkowane mogły zostać zakwalifikowane do kapitału Tier II „przepisy regulujące dane instrumenty lub pożyczki podporządkowane, stosownie do przypadku, nie zawierają żadnej zachęty do wykupu lub spłaty – stosownie do przypadku – kwoty głównej tych instrumentów lub pożyczek przez daną instytucję przed terminem ich zapadalności”. Równocześnie art. 20 Rozporządzenia Delegowanego Komisji (UE) Nr 241/2014 z dnia 7 stycznia 2014 r., określa formę i charakter zachęt do wcześniejszego wykupu do celów art. 63 lit h) Rozporządzenia nr 575/2013. Czy przepisy regulujące pożyczkę podporządkowaną, w których zapisano, że emitent po uzyskaniu zgody Komisji Nadzoru Finansowego, ma prawo, ale nie obowiązek dokonać wcześniejszego wykupu przedmiotowych obligacji, nie wcześniej jednak niż w terminie 5 lat po dacie emisji oraz, iż w okresie ostatnich 5 lat przed terminem wykupu obligacji, będzie sukcesywnie podnosił oprocentowanie wyemitowanych instrumentów, zawierają zachętę do wcześniejszego wykupu lub spłaty? Jeżeli tak, to czy zgodnie z zapisami art. 20 ust. 2 Rozporządzenia Delegowanego Komisji (UE) Nr 241/2014, oznacza to, że w przepisach regulujących wskazaną wyżej pożyczkę podporządkowaną zawarta jest „opcja kupna połączona ze zwiększeniem spreadu kredytowego instrumentu w przypadku nieprzeprowadzenia wezwania do sprzedaży” lub inna forma zachęt określona w Rozporządzeniu Nr 241/2014? Jeżeli tak, to czy formalny brak zgody Komisji Nadzoru Finansowego (art. 78 ust. 1 Rozporządzenia nr 575/2013) na wcześniejszy wykup wskazanych wyżej obligacji podporządkowanych jest równoznaczny z anulowaniem zachęty do wcześniejszego wykupu lub spłaty? English translation: The provisions regulating a specific subordinated loan that has been issued in 2012 state that, having received the consent of the Competent Authority, the issuer is entitled to, but not required to, redeem the bonds in question prior to their maturity date, and that, within the final five years prior to the bond redemption date, the issuer shall successively increase the interest rate for the instruments issued. Q1: Are the corresponding provisions deemed to include any incentive to redeem or repay prior to the maturity date despite the need to obtain first the consent from the Competent Authority? Said otherwise, is a formal lack of consent of the relevant Competent Authority (Article 78(1) of the CRR) for redemption of the aforementioned subordinated bonds prior to their maturity equivalent to cancelling an incentive to redeem or repay them prior to their maturity? Q2: What would be the regulatory status of the subordinated bonds in the case where the relevant Competent Authority does not give its consent for the redemption of such instruments prior to their maturity?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2016_3076| Topic: Own funds| Date of submission: 29/12/2016

Prior permission for repurchase of CET 1 instruments for discretionary trading activity over treasury shares for a certain predetermined amount.

Should the prior permission for the repurchase of CET 1 instruments for discretionary trading activity over treasury shares be subject to Article 29(5) of Regulation 241/2014? In such case, would any prior permission given under Article 29(5) of Regulation 241/2014 to repurchase CET 1 instruments for discretionary trading activity over treasury shares purposes result in a deduction from own funds at the time when the permission is granted or would a deduction from own funds be made at the time when the relevant repurchase of CET 1 instruments takes place? 

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2017_3174| Topic: Own funds| Date of submission: 22/02/2017

Short positions in financial institution capital instruments

1. For a contract between bank A and B as set out in the background that is a forward sell (physical delivery), can Bank A deduct from its own funds the net position on FSE? 2. For a contract between bank A and B as set out in the background that is cash-settled (TRS, future, options), can Bank A deduct from its own funds the net position on FSE?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2016_2785| Topic: Own funds| Date of submission: 10/06/2016

Gross-up calls on Tier 2

Should gross-up cases on Tier 2 be allowed only in relation to coupon withholding tax (and not principal)?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2016_2849| Topic: Own funds| Date of submission: 28/07/2016

Incentives to redeem of a hybrid instrument with a call for grandfathering purposes

Article 489 of Regulation (EU) No 575/2013 (CRR) provides for the grandfathering treatment of hybrid instruments with a call and an incentive to redeem. A bank has issued a bond with a fixed coupon before the first call date and a floating rate coupon after the first call date. The credit spread of the fixed coupon as of the issuance date is the same as the margin of the floating rate coupon after the first call date, so there is no immediate step-up there. However, the floating rate coupon is floored at the level of the fixed rate coupon. Does this constitute an incentive to redeem ?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2016_2988| Topic: Own funds| Date of submission: 11/11/2016

Calculation of the predetermined amount for market making purposes

Which amount has to be taken into account in market making operations when the nominal amount of the repurchased CET 1 instruments , e.g. shares, is 1 EUR per share but the current market price which has to be paid for the repurchase of the share is higher, for example 20 EUR. Which amount has to be taken into account to compute the predetermined maximum amount for market making purposes for which permission has been granted by the NCA according to Article 29 (3) (a) of Delegated Regulation (EU) No. 241/2014?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2016_2852| Topic: Own funds| Date of submission: 02/08/2016

Predetermined amount in case of applications for redemptions, reductions and repurchases by mutuals, cooperative societies, savings institutions or similar institutions for the purposes of Article 77 CRR

Article 32(2) of Commission Delegated Regulation (EU) No 241/2014 (RTS on own funds) states: “Competent authorities may give their permission in advance to an action listed in Article 77 of Regulation (EU) No 575/2013 (CRR) for a certain predetermined amount to be redeemed, net of the amount of the subscription of new paid in Common Equity Tier 1 instruments during a period up to one year. That predetermined amount may go up to 2 % of Common Equity Tier 1 capital […]”. 1. Which of the following interpretations is correct? (1) Once permission is given for a certain predetermined amount, any subsequent subscription of new paid-in CET1 instruments during a period up to one year from date of permission increases automatically the total amount that is permitted to be redeemed (i.e. the maximum redemption amount that can be permitted in advance is 2% + x, for which x increases with any amount of new paid-in CET1 instrument additionally subscribed within one year). (2) In addition to the predetermined amount, the advance permission covers solely the amount of subscriptions during the period of one year that are already expected at the moment the permission is granted, i.e. it solely extends the predetermined amount by a fixed amount for the issuances already planned at the moment the permission is granted. (3) The advance permission for redeeming the predetermined amount does not cover redemption of new paid-in Common Equity Tier 1 instruments during a period up to one year. 2. Could it be that, because of an editorial oversight, a comma is missing in the first sentence of Article 32(2) RTS on own funds, before "during a period up to one year"? Setting the comma would consistently restrict not only the recognition of new subscriptions but already the advance permission for redemption to the same period of one year.

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2015_2094| Topic: Own funds| Date of submission: 06/07/2015

Predetermined amount for market making with partially grandfathered or amortised instruments

An institution has asked for advance permission according to Article 29(3) of Commission Delegated Regulation (EU) No 241/2014 (RTS on own funds) to carry out repurchases of its own funds instruments for market making purposes. It intends to repurchase up to 3% of the nominal amount of these instruments. Some of these instruments are partially phased-out ("grandfathered" instruments) or already partially amortised. 1. What is in this case the predetermined amount for the limits in points (a) and (b) of Article 29(3) RTS on own funds which is, according to Q&A 2014_1352, required to be deducted pursuant to Article 28(2) RTS on own funds from the moment the authorisation is granted? (a) 3% of the nominal amount of the instruments (i.e. including phased-out/amortised amounts), or (b) solely 3% of the amount still qualified for own funds (i.e. excluding phased-out/amortised amounts) 2. Do in this case the amounts of the relevant issuance [Article 29(3)(a)(1) and (b)(1) RTS on own funds] and of total outstanding Additional Tier 1 instruments or Tier 2 instruments [Article 29(3)(b)(2) RTS on own funds] refer to (a) the full nominal amount (i.e. including phased-out/amortised amounts), or (b) solely the amount still qualified for own funds (i.e. excluding phased-out/amortised amounts)? 3. If solely the amount still qualified for own funds is considered for the predetermined amount or the limits, what is the maximum amount that the institution can repurchase?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2015_2095| Topic: Own funds| Date of submission: 06/07/2015

Market making in several AT1 or T2 instruments

Where an institution applies for permission for repurchase of several Additional Tier 1 or Tier 2 capital instruments for market making purposes according to Article 29 (3) of Regulation (EU) 241/2014, may the predetermined amount of the permission be set for several instruments or must a predetermined amount be set for each instrument?

Legal act: Regulation (EU) No 575/2013 (CRR) as amended

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2015_2042| Topic: Own funds| Date of submission: 12/06/2015