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

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    News

    EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis

    EBA published a statement on resolution planning in light of the COVID-19 pandemic.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    July 08, 2020 WebPage Regulatory News
    News

    ECB Guideline on Materiality Threshold for Credit Obligations Past Due

    ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.

    July 08, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act

    FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.

    July 08, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5458