- Question ID
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2014_889
- Legal act
- Directive 2013/36/EU (CRD)
- Topic
- Other issues
- Article
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141
- Paragraph
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2
- Subparagraph
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a
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
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NA
- Type of submitter
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Investment firm
- Subject matter
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Definition of Additional Tier 1 instruments for the purposes of Article 141 of Directive 2013/36/EU
- Question
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For the application of Article 141 of Directive 2013/36/EU (CRD) regarding distribution limitations (Maximum Distributable Amount (MDA)), should Additional Tier 1 (AT1) instruments be defined as instruments that meet the conditions set out in Article 52 of Regulation (EU) No 575/2013 (CRR) or should it also include instruments that are grandfathered in the AT1 category through the application of the various grandfathering provisions? If grandfathered instruments are also included, how is this consistent with the grandfathering amortisation profile applicable to some instruments (i.e. instruments are not eligible / not eligible on an individual basis but there is simply a maximum stock of old hybrid instruments that are reported as AT1) and with the possible pusher provisions that exist in many old instruments?
- Background on the question
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Clarification is sought on the impact of the MDA criteria on old hybrid instruments
- Submission date
- Final publishing date
-
- Final answer
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Article 141 of Directive 2013/36/EU (CRD) lays down provisions regarding restrictions on distributions where an institution is in breach of its combined buffer requirement. These restrictions also apply to payments on Additional Tier 1 (AT1) instruments. Since instruments that used to qualify as original own funds under the national transposition of Articles 57(ca) and 154(8) and (9) of Directive 2006/48/EC are, according to Article 484(4) of Regulation (EU) No 575/2103 (CRR), qualified as AT1 items (in the case of instruments, therefore as Additional Tier 1 instruments), they are also captured by the restrictions on distributions under Article 141 CRD. In this context it should be highlighted that Article 141(7) CRD contains a safeguard provision, according to which the restrictions imposed by Article 141 CRD shall only apply to payments that result in a reduction of Common Equity Tier 1 capital or in a reduction of profits, and where a suspension of payment or failure to pay does not constitute an event of default or a condition for the commencement of proceedings under the insolvency regime applicable to the institution.
DISCLAIMER:
This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.
- Status
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Final Q&A
- Answer prepared by
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Answer prepared by the European Commission because it is a matter of interpretation of Union law.
- Note to Q&A
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Update 26.03.2021: This Q&A has not yet been reviewed by the European Commission in the light of the changes introduced to Directive 2013/36/EU (CRD).
Disclaimer
The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.