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

    EIOPA Report Analyzes Use and Impact of Long-Term Guarantee Measures

    EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.

    December 03, 2020 WebPage Regulatory News
    News

    BIS, SNB, and SIX Announce Successful Completion of CBDC POC

    The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.

    December 03, 2020 WebPage Regulatory News
    News

    EBA Sets Out Treatment of Certain Banking Book Positions Under FRTB

    EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.

    December 03, 2020 WebPage Regulatory News
    News

    EIOPA Consults on Integrating Climate Change into SII Standard Formula

    EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.

    December 02, 2020 WebPage Regulatory News
    News

    EU Issues Corrigenda to Investment Firms Directive and Regulation

    EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.

    December 02, 2020 WebPage Regulatory News
    News

    MAS Proposes Changes to Rules Arising from Banking Amendment Act

    MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.

    December 02, 2020 WebPage Regulatory News
    News

    PRA to Elaborate on Approach to Transposition of CRD5 by Mid-December

    PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.

    November 30, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Aspects of Insurance Act, Solvency Standards & IFRS17

    RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.

    November 30, 2020 WebPage Regulatory News
    News

    SRB Sets Out Work Program for 2021-2023

    SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.

    November 30, 2020 WebPage Regulatory News
    News

    EIOPA Consults on KPIs on Sustainability for Non-Financial Reporting

    EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.

    November 30, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6191