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
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