Question ID
2023_6768
Legal act
Directive 2013/36/EU (CRD)
Topic
Own funds
Article
80
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
EBA/GL/2016/10 - Guidelines on ICAAP and ILAAP information collected for SREP purposes
Article/Paragraph
.
Type of submitter
Accounting firm
Subject matter
Negative Goodwill
Question

Positive Goodlwill ie where a firm has purchased an entity above book value, is deducted from CET1 to determine the elligible capital balance. However how should Negative Goodwill be treated ie where a firm has purchased an entity at a discount? The profit on the purchase goes through the purchasing firm's P&L so does that mean negative goodwill is elligible to be included in CET1 capital?

Background on the question

Banking mergers where the use of the resolvability tools may result in an entity being sold to another organisation at a discount to book value.

Submission date
Rejected publishing date
Rationale for rejection

This question has been rejected because it is considered that EBA guidance or clarification is not needed with regard to the issue that it raises. For example, this can be the case where it is considered that the existing regulatory framework is sufficiently clear and unambiguous, or where different practices may be possible but it is not currently necessary to harmonise these further through the Q&A process.

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Status
Rejected question