January 02, 2018

BaFin published a general order that regulates how newly issued shares in cooperative banks, with the permission of the BaFin, can be classified as instruments of common equity tier 1 (CET1) capital.

The general order concerns only cooperative banks that are not subject to the direct supervision of ECB. The general order is pursuant to Capital Requirements Regulation (CRR: Regulation (EU) No 575/2013) and Article 32 (2) of Delegated Regulation (EU) No 241/2014 and it supplements CRR with regard to regulatory technical standards for own funds requirements for institutions. Article 32 (2) of Delegated Regulation (EU) No 241/2014 states that competent authorities may give their permission in advance to an action listed in Article 77 of CRR for a certain predetermined amount to be redeemed, net of the amount of the subscription of new paid in CET1 instruments during a period of up to one year. That predetermined amount may go up to 2% of CET1 capital, if they are satisfied that this action will not pose a danger to the current of future solvency situation of the institution.

 

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Keywords: Europe, Germany, Banking, CET1, CRR, Cooperative Banks, BaFin

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