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

    UK Government to Set Out Rules on Wind-down of Critical Benchmarks

    HM Treasury notified that, after considering all responses, the government intends to bring forward further legislation, when the Parliamentary time allows, to address issues identified in the consultation on supporting the wind-down of critical benchmarks.

    May 07, 2021 WebPage Regulatory News
    News

    EIOPA Launches Stress Test for Insurance Sector in EU

    EIOPA launched the 2021 stress test for the insurance sector in EU.

    May 07, 2021 WebPage Regulatory News
    News

    UK Authorities Publish Third Edition of Regulatory Initiatives Grid

    UK authorities jointly published the third edition of Regulatory Initiatives Grid setting out the planned regulatory initiatives for the next 24 months.

    May 07, 2021 WebPage Regulatory News
    News

    EC Consults on Regulation on Non-Financial Sustainability Disclosures

    EC is requesting feedback on the proposed Commission Delegated Regulation on the content, methodology, and presentation of information that large financial and non-financial undertakings should disclose about their environmentally sustainable economic activities under the Taxonomy Regulation.

    May 07, 2021 WebPage Regulatory News
    News

    OSFI Outlines Prudential Policy Priorities for Coming Months

    OSFI has set out the near-term priorities for federally regulated financial institutions and federally regulated private pension plans for the coming months until March 31, 2022.

    May 06, 2021 WebPage Regulatory News
    News

    BIS Announces TechSprint on Innovative Green Finance Solutions

    Under the Italian G20 Presidency, BIS Innovation Hub and the Italian central bank BDI launched the second edition of the G20 TechSprint on the lookout for innovative solutions to resolve operational problems in green and sustainable finance.

    May 06, 2021 WebPage Regulatory News
    News

    ACPR Publishes Version 1.0.0 of RUBA Taxonomy

    ACPR published Version 1.0.0 of the RUBA taxonomy, which will come into force from the decree of January 31, 2022.

    May 06, 2021 WebPage Regulatory News
    News

    EBA Proposed Regulatory Standards for Central Database on AML/CFT

    EBA proposed the regulatory technical standards on a central database on anti-money laundering and countering the financing of terrorism (AML/CFT) in EU.

    May 06, 2021 WebPage Regulatory News
    News

    ECB Responds to EC Consultation on Crisis Management Framework

    ECB published its response to the targeted EC consultation on the review of the bank crisis management and deposit insurance framework in EU.

    May 06, 2021 WebPage Regulatory News
    News

    BCBS, CPMI, and IOSCO to Survey Market Participants on Margin Calls

    BCBS, CPMI, and IOSCO (the Committees) are inviting entities that participate in market infrastructures and securities markets through an intermediary as well as non-bank intermediaries to complete voluntary surveys on the use of margin calls.

    May 05, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6942