Response to consultation on draft technical standards on own funds - Part IV

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Is the application of the different tests clear? How do you assess the approach retained for non-joint stock companies?

Sectors with NJSC member institutions welcome the differentiation between JS and NJS. However it seems that the decision tree is not fully reflected in the legal text (Art. 7b par. 5 and 6). Especially on the limitation on voting rights in Art. 7b par 5 the case is not reflected that the number of voting instruments is unlimited but die voting right itself is limited (e.g. 5 voting instruments have one voting right).

How do you assess the applicability of the conditions in paragraph 2?

According to Art. 7b par. 2 lit. d the same dividend multiple shall apply to all instruments with a dividend multiple. Due to different market expectations at the date of issuance a corridor between 100% and limits on multiples up to [200% - tbd] should be possible.

Is the chosen approach applicable to all instruments that may be issued by non-joint stock institutions?

Not in all jurisdictions non-voting instruments may be subscribed only by voting shareholders.

Furthermore it is not common that legal caps are externally set by national applicable law. There is rather the possibility to have a cap. The cap itself is normally set statutorily or contractually. Also the CRR does not differentiate between legal and statutory caps.

How do you assess the proposed levels of 30% for the payout ratio in paragraph 5(d) of Article 7b?

The definition of the payout ratio is not clear. It should be kept in mind that usually National Generally Accepted Accounting Principles are the basis for distributions. The focus on profits seems to be too narrow as profits usually are items after the booking of reserves. The definition of the payout ratio acc. Art. 7b par 7 should rather be calculated on the basis of distributable items acc. Art. 4 (1) 128 CRR.

Is the application of the different tests clear? How do you assess the approach retained for non-joint stock companies?

no answer

Name of organisation

Austrian Federal Economic Chamber/Division Bank & Insurance