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Credit risk mitigation techniques - independent, written and reasoned legal opinions

Must lending institutions always obtain a written reasoned legal opinion in order to rely on their credit protection techniques for the purposes of Article 194(1) of the CRR? If so : a) must such opinion be obtained from external legal counsel? b) must such opinion be specific to the relevant transaction and techniques in respect of which the institution seeks to rely upon such opinion, or can lending institutions rely on generic opinions for particular types of transactions? If the latter, how often should the generic opinions be updated?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_23| Topic: Credit risk| Date of submission: 04/07/2013

Application of national liquidity requirements prior to binding EU requirements

In 2010 we have introduced the Decision on liquidity risk management, which covers both qualitative and quantitative requirements on liquidity risk management for the credit institutions in the Republic of Croatia. Regarding the quantitative requirements banks have to calculate and report, on monthly basis, to the CNB the minimum liquidity coefficient (MLC). It is similar to the Liquidity Coverage Ratio (LCR), it looks inflow and outflows in one month horizon under stress scenario determined by the supervisor. This minimum liquidity coefficient is calculated by dividing liquidity inflows (including liquid assets) with liquidity outflows and the result has to be equal or greater than 1. According to the Article 412 (5) of Regulation (EU) No 575/2013 the Member States may maintain or introduce national provisions in the area of liquidity requirements before binding minimum standards for liquidity coverage requirements are specified and fully introduced in the Union in accordance with Article 460. Therefore we have two questions: 1) Our understanding of Article 412 (5) is that we may maintain our Decision on liquidity risk management until 2018 (or even 2019 - according to article 460(2)) when the LCR is fully introduced in the Union (i.e. LCR = 100%) Is this correct reading? 2) We are not sure how to understand the second part of Article 412 (5) which says: Member states or competent authorities may require domestically authorised institutions, or a subset of those institutions to maintain a liquidity coverage requirement up to 100% until the binding minimum standard is fully introduced at a rate of 100% in accordance with Article 460. Can we keep our minimum liquidity coefficient unchanged, or we have to change it based on phasing-in process from 2015 so that both LCR and our MLC equals 100%, i.e. in 2015 LCR = 60% and MLC = 40%, and so on. Although it will be difficult to calculate due to different formula, haircuts and maybe scope. But on the other hand if we maintain MLC unchanged and introduce LCR (first 60%, 70%...) than our banks will have double requirements. Or this does not have anything to do with national liquidity requirements but with the fact that Member states may introduce LCR at 100% even before 2018?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_22| Topic: Liquidity risk| Date of submission: 03/07/2013

Application of requirements on a sub-consolidated basis

Does Article 11 (5) allow competent authorities to apply the provisions of Regulation (EU) No 575/2013 and Directive 2013/36/EU to an institution on its sub-consolidated basis in cases other than where the structural separation of activities is required under national laws, and in cases other than those provided for in Article 11 (1) to (3), and Article 22 of Regulation (EU) No 575/2013?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_20| Topic: Other topics| Date of submission: 03/07/2013

Recognition of Additional Tier 1 and Tier 2

Article 92 of Regulation (EU) No 575/2013 introduces minimum ratios for CET 1 (4,5 %), Tier 1 (6%) and total capital (8 %). Setting aside any buffer requirements, this means that an institution that holds a total capital ratio of 8% can have at most: - 18,75 % of AT 1 capital, and - 25% of Tier 2 capital, as a percentage of its total regulatory own funds. Are these percentages a cap for the recognition of AT 1 and Tier 2 in regulatory capital that may not be exceeded at any time regardless of the capital ratio the institution actually holds (similar to what is currently set out in Article 66 of Directive 2006/48/EC (Capital Requirements Directive)) or does the Regulation (EU) No 575/2013 repeal the gearing limits used in Directive 2006/48/EC (Capital Requirements Directive), giving institutions freedom to decide on the composition of their regulatory capital as long as they meet the minimum requirements mentioned in Article 92?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_19| Topic: Own funds| Date of submission: 03/07/2013

Grandfathering of own funds instruments

May capital instruments be adjusted stepwise with the unadjusted part still being eligible for grandfathering? Take the following example: - An institution has issued a hybrid Tier 1 instrument that does not meet the requirements of Article 52 but is eligible for grandfathering; - starting in 2013, the bank adjusts in each year the terms and conditions of 10% of the nominal amount in order to make it fully eligible as Additional Tier 1 (AT1) under Regulation (EU) No 575/2013; - the terms and conditions of the remaining nominal amount of the capital instrument are kept unchanged. May the institution recognize the remaining part of the capital instrument as AT 1 under the grandfathering rules of the Regulation (EU) No 575/2013 given that only the nominal amount but not the terms and conditions of this remaining part are adjusted or does the change of the nominal amount also constitute a change of the whole contract, making the whole instrument no longer eligible for grandfathering since the new contract is concluded after the cut-off date mentioned in Article 484 (1)?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_18| Topic: Own funds| Date of submission: 03/07/2013

Grandfathering of own funds instruments

Would a contractual change of a capital instrument terms and conditions (T&C) issued before December 31, 2011 allow a bank to keep the instrument in the own funds within the limits provided for in Articles 484 and 486 (grandfathering eligibility and limits of capital instruments that are not State aid) if the amendments to the T&C would not make the instrument entirely compliant with the provisions of Regulation (EU) No 575/2013 but are limited to remove the contractual conditions that would determine the disqualification of the instrument during the grandfathering period (e.g.: deletion from the T&C of a Tier 2 capital instrument of the call option and of the incentive to redeem clause)?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_16| Topic: Own funds| Date of submission: 03/07/2013

Grandfathering of own funds instruments

What will be the treatment of an Additional Tier 1 (AT1) instrument structured with a first call date and one step up after 5 years prior to 1 January 2013, callable quarterly thereafter at every interest payment date without any step up (subject to supervisory approval)? Is the instrument eligible for grandfathering if not called at the first call date? If the instrument is derecognized as AT1 on 1 January 2013, can it be included into Tier 2 and, if so, what amount will be eligible (full amount or gradually phased out amount)?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_15| Topic: Own funds| Date of submission: 03/07/2013

Grandfathering of own funds instruments

How shall the 15% threshold referred to in Article 48 of Regulation (EU) No 575/2013 be calculated?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_14| Topic: Own funds| Date of submission: 03/07/2013

Grandfathering of own funds instruments

Will old style Tier 2 issuances without a reference to the proposals for a Directive Establishing a Framework for the Recovery and Resolution of Credit Institutions and Investment Firms / Point of Non-viability (PON) fully qualify upon entry into force of Regulation (EU) No 575/2013?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_13| Topic: Own funds| Date of submission: 03/07/2013

Grandfathering of own funds instruments

Will preference shares issued in 2009 subscribed by the government and currently accepted as Core Tier 1 qualify for grandfathering of State aid?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_12| Topic: Own funds| Date of submission: 03/07/2013

Scope of the institutions subject to the data collection

This Q&A deals with the scope of application for the information collection foreseen by Article 75 (3) of Directive 2013/36/EU specified by EBA Guidelines on the Data Collection Exercise Regarding High Earners (EBA/GL/2012/5 of 27 July 2012). Should data also be collected from EEA Branches of non-EEA institutions?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_7| Topic: Remuneration| Date of submission: 03/07/2013

Definition of amounts to be reported

This Q&A deals with the definition of amounts to be reported for the information collection foreseen by Article 75 (1) of Directive 2013/36/EU as set out by templates in annexes I and II of the EBA Guidelines on the Remuneration Benchmarking Exercise (EBA/GL/2012/4 of 27 July 2012). Some clarifications have been asked how to fill in certain fields of the Annex regarding: (a) Field: "total variable remuneration": (b) Field: "total amount of variable remuneration deferred in year N": (c) Field: "amount of explicit ex post performance adjustment applied in year N for remuneration awarded in previous years":

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_6| Topic: Remuneration| Date of submission: 03/07/2013

Definition of retail and investment banking for information collection

This Q&A clarifies the definition of retail and investment banking for the information collection foreseen by Article 75 (1) of Directive 2013/36/EU as set out in the Templates of Annexes I and II of the EBA Guidelines on the Remuneration Benchmarking Exercise (EBA/GL/2012/4 of 27 July 2012). It is not clear if wholesale lending should be included in retail lending or in the investment banking business. Could you specify more the activities included in the investment banking business area?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_5| Topic: Remuneration| Date of submission: 03/07/2013

Frequency of reporting, submission dates, reference year for information collection

This Q&A deals with the currency exchange rates of the information collection foreseen by Article 75 (1) of Directive 2013/36/EU specified by paragraph 5 of the EBA Guidelines on the Remuneration Benchmarking Exercise (EBA/GL/2012/4 of 27 July 2012). What currency is to be used for bonuses paid during the year of submission of the information and are monthly currency exchange rates applicable for the conversion?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_4| Topic: Remuneration| Date of submission: 03/07/2013

Frequency of reporting, submission dates, reference year for information collection

This Q&A deals with the reference year of the information collection foreseen by Article 75 (1) of Directive 2013/36/EU specified by paragraph 5.3 of the EBA Guidelines on the Remuneration Benchmarking Exercise (EBA/GL/2012/4 of 27 July 2012). How should “accounting year end numbers” be interpreted in the context of bonuses (as variable remuneration) paid during the year of submission of the information for performance during the preceding year?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_3| Topic: Remuneration| Date of submission: 03/07/2013

Scope of consolidation of information collection

This Q&A deals with the scope of consolidation for the information collection foreseen by Article 75 (1) of Directive 2013/36/EU specified by the EBA Guidelines on the Remuneration Benchmarking Exercise (EBA/GL/2012/4 of 27 July 2012). According to paragraph 3 of the EBA Guidelines institutions should provide data at the highest level of consolidation as set out in Directive 2006/48/EC (replaced by Directive 2013/36/EU). Shall data be provided only for bank and investment firms, including branches and subsidiaries which are banks and investment firms, or for all entities, for example, leasing companies, included in the scope of consolidation at bank level?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_2| Topic: Remuneration| Date of submission: 03/07/2013

Scope of institutions subject to the data collection

This Q&A deals with the scope of the institutions subject to the information collection foreseen by Article 75 (1) of Directive 2013/36/EU are specified by the EBA Guidelines on the Remuneration Benchmarking Exercise (EBA/GL/2012/4 of 27 July 2012). According to paragraph 2.1 of the EBA Guidelines the list of institutions to participate in the exercise, should be selected applying one of the two criteria (a) the institutions should represent 60% of the total banking sector or (b) by selecting the 20 largest institutions from the banking sector. Regardless of the chosen criteria the list will comprise institutions that have parent banks and whose data will be reported on a consolidated level by the home authority. This can lead to situations where data for institutions within one member state are only provided within the data for a banking group and no national benchmark can be calculated. Which data shall be provided to EBA?

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2013_1| Topic: Remuneration| Date of submission: 03/07/2013

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