Featured Product

    EBA Intends to Clarify End-Treatment of Grandfathered Instruments

    September 09, 2019

    EBA announced its intention to clarify the prudential treatment applicable to own funds instruments at the end of the grandfathering period, which expires on December 31, 2021. EBA plans to communicate on the end-treatment of the legacy grandfathered instruments by mid-2020 to allow institutions time to adequately prepare for the end of the grandfathering period. EBA will provide this clarification in line with its mandate, under the Capital Requirements Regulation (CRR), to monitor the quality of own funds and eligible liabilities instruments issued by institutions across EU. The intention of this clarification is to ensure a high quality of capital for EU institutions and a consistent application of rules and practices.

    Grandfathering provisions were introduced when CRR entered into force. To ensure that institutions had sufficient time to meet the requirements set out by the new definition of own funds, certain capital instruments that, at that time, did not comply with the new definition of own funds were grandfathered for a transition period with the objective of phasing them out from own funds. While reflecting on this issue, EBA will also clarify the interaction with the new grandfathering provisions introduced by the recent Banking Package and the corresponding amendments to CRR and the Bank Recovery and Resolution Directive (BRRD), where relevant, for own funds instruments and eligible liabilities.

    EBA encourages institutions to engage with their respective competent authorities with regard to the magnitude and intended future treatment of their outstanding "legacy" instruments in the context of the supervisory dialog on their capital planning. Article 484 of CRR defines the eligibility for grandfathering of items that qualified as own funds under national transposition measures for Directive 2006/48/EC. Article 486 specifies the limits for grandfathering of items within Common Equity Tier 1 (CET1), Additional Tier 1 (AT1), and Tier 2 items until December 31, 2021, including the possibility for competent authorities to implement shorter grandfathering periods. Pursuant to Article 80 of CRR (as amended by Regulation (EU) 2019/876), EBA has been continuously monitoring the quality of CET1 and AT1 issuance in EU since 2013 and regularly publishes the corresponding monitoring reports.


    Related Links

    Keywords: Europe, EU, Banking, Own Funds, Grandfathering Period, CRR, BRRD, Banking Package, Regulatory Capital, CET 1, AT 1, EBA

    Featured Experts
    Related Articles
    News

    EBA Updates List of Validation Rules for Reporting by Banks

    EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.

    September 10, 2020 WebPage Regulatory News
    News

    EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework

    EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).

    September 10, 2020 WebPage Regulatory News
    News

    NGFS Advocates Environmental Risk Analysis for Financial Sector

    NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.

    September 10, 2020 WebPage Regulatory News
    News

    MAS Issues Guidelines to Promote Senior Management Accountability

    MAS published the guidelines on individual accountability and conduct at financial institutions.

    September 10, 2020 WebPage Regulatory News
    News

    APRA Formalizes Capital Treatment and Reporting of COVID-19 Loans

    APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.

    September 09, 2020 WebPage Regulatory News
    News

    SRB Chair Discusses Path to Harmonized Liquidation Regime for Banks

    SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.

    September 09, 2020 WebPage Regulatory News
    News

    FSB Workshop Discusses Preliminary Findings of Too-Big-To-Fail Reforms

    FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.

    September 09, 2020 WebPage Regulatory News
    News

    ECB Updates List of Supervised Entities in EU in September 2020

    ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.

    September 08, 2020 WebPage Regulatory News
    News

    OSFI Identifies Focus Areas to Strengthen Third-Party Risk Management

    OSFI published the key findings of a study on third-party risk management.

    September 08, 2020 WebPage Regulatory News
    News

    FSB Extends Implementation Timeline for Framework on SFTs

    FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.

    September 07, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5796