BaFin published a new general directive (or general order) with the intent to regulate the extent to which newly issued shares in cooperative banks can be classified as instruments of common equity tier 1, or CET 1, capital. The directive also specifies the conditions under which the repayment of business credit due to canceled cooperative shares must be approved in advance. The directive only affects cooperative banks that are not subject to the direct supervision of ECB. The general directive is valid until the end of 2020. The previous order on common equity tier 1 instruments at cooperative banks was limited until December 31, 2019.
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Keywords: Europe, Germany, Banking, CET 1, CRR2, Regulatory Capital, Cooperative Banks, Basel III, Less Significant Institutions, BaFin
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