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

    APRA Publishes Approach to Regulating and Supervising GCRA Risks

    APRA published an information paper that sets out a more intensive regulatory approach to transform governance, culture, remuneration, and accountability (GCRA) practices across the prudentially regulated financial sector.

    November 19, 2019 WebPage Regulatory News
    News

    IAIS Publishes Application Paper on Recovery Planning

    IAIS published the final application paper on recovery planning, along with the resolution of comments on the draft application paper.

    November 18, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of November Meeting of RCG for MENA Region

    FSB published a summary of the November meeting of the Regional Consultative Group (RCG) for Middle East and North Africa (MENA).

    November 17, 2019 WebPage Regulatory News
    News

    EBA Single Rulebook Q&A: Second Update for November 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to eight questions that relate to the Bank Resolution and Recovery Directive (BRRD) and the Capital Requirements Regulation and Directive (CRR and CRD).

    November 15, 2019 WebPage Regulatory News
    News

    FSI Examines Use of Red Team Testing to Enhance Cyber Resilience

    The Financial Stability Institute (FSI) of BIS published a paper that examines the contribution of red team testing frameworks toward enhancing cyber resilience.

    November 15, 2019 WebPage Regulatory News
    News

    FASB Delays Effective Dates for CECL, Leases, and Hedging Standards

    FASB issued two Accounting Standards Updates finalizing the delays in effective dates for standards on current expected credit losses (CECL), leases, hedging, and long-duration insurance contracts.

    November 15, 2019 WebPage Regulatory News
    News

    ESMA Updates Q&A on Securitization Regulation in November 2019

    ESMA updated questions and answers (Q&A) on the Securitization Regulation (Regulation 2017/2402).

    November 15, 2019 WebPage Regulatory News
    News

    HKMA Announces Finalization of Banking Liquidity Amendment Rules 2019

    HKMA issued a letter informing all authorized institutions that negative vetting of the Banking (Liquidity) (Amendment) Rules 2019 (BLAR) has now expired. Thus, the BLAR will now come into operation from January 01, 2020.

    November 15, 2019 WebPage Regulatory News
    News

    BCBS Consults on Revised Disclosures for Market Risk Framework

    BCBS launched a consultation on the revised disclosure requirements for the market risk framework for banks.

    November 14, 2019 WebPage Regulatory News
    News

    BCBS Consults on Disclosure Templates of Sovereign Exposures of Banks

    BCBS published a consultation on the voluntary disclosure templates related to sovereign exposures of banks.

    November 14, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4167