ECB published a letter on amendments to the Annexes to public guidance on the review of qualification of capital instruments as additional tier 1 and tier 2 instruments. The Annexes to the public guidance include templates on the main features of the instruments and on the self-assessment to be performed by the entity on the eligibility conditions. The templates are being updated to reflect the eligibility criteria newly introduced in the revised Capital Requirements Regulation or CRR 2 (2019/876). CRR 2 amended several provisions concerning the eligibility conditions that capital instruments must fulfil to be classified as additional tier 1 or tier 2 instruments, pursuant to Articles 52 and 63, respectively.
For each of the items mentioned in Annex 1 to the letter, the entity should provide the relevant information that should be based on the applicable provisions contained in the agreement governing the capital instrument or any other relevant document. Entities must review and assess each capital instrument against the requirements for own funds set out in the relevant provisions of the CRR and the regulatory technical standards on own funds, taking into consideration the relevant EBA questions and answers and the EBA report on the monitoring of additional tier 1 issuances. An entity must provide all the relevant information to confirm that the conditions have been met. It must also copy or refer to the applicable provisions in the agreement governing the capital instrument and any other relevant documents and refer to the applicable EBA questions and answers that have been taken into consideration. Annex 2 to the letter contains the standard self-assessment templates on eligibility conditions of the additional tier 1 and tier 2 capital instruments.
Related Link: Letter (PDF)
Keywords: Europe, EU, Banking, Reporting, Regulatory Capital, CRR2, Additional Tier 1, Additional Tier 2, Basel, ECB
Previous ArticleEBA Sets Out Work Priorities and Deliverables for 2021
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.