The EBA responds to law firm on the prudential treatment of legacy instruments held by DNB Bank ASA

The European Banking Authority (EBA) published today a response to the letters received from a law firm on 23 June and 3 October 2022, regarding the case of the prudential classification as Tier 2 instruments of legacy perpetual bonds (so-called ‘Discos’) of an institution established in Norway (DNB Bank ASA).

After careful consideration of the concerns raised, and a scrutiny of the detailed terms and conditions of the Discos, the EBA assessed that the Discos cannot count as fully eligible Tier 2 instruments of DNB Bank ASA. The EBA shared with the relevant competent authority this assessment for its own consideration, as well as to be informed of the next steps it intends to take, in particular with regard to the EBA Opinion on legacy instruments and the cascading options it contains to address the so-called infection risk.

The EBA will continue monitoring the residual limited stock of legacy instruments in coordination with the concerned competent authorities.

Note to the editors

In October 2020, the European Banking Authority (EBA) published its Opinion on the prudential treatment of so-called ‘Legacy instruments’ in the context of the end of the grandfathering period in December 2021. On 7 July 2022 the EBA published the outcome of the implementation of its Opinion.