11 July 2016

EBA updates on monitoring of Additional Tier 1 instruments

This second update of the report is based on the review of 33 AT1 issuances from EU institutions, which took place between August 2013 and December 2015, for a total amount of EUR 35.5 bn.

Compared with the first update released in May 2015, this report includes new provisions on triggers, calls/ repurchases/redemptions, tax events and gross-up provisions and on conversion and write-down mechanisms.

The objective of standardised templates for AT1 issuances is to cover the prudential provisions of the AT1 issuances. They contain essential and optional provisions concerning in particular flexibility of payments, permanence, loss absorbency and are based on the most commonly observed loss absorption mechanisms.

These standardised templates are proposed to institutions on an opt-in basis, in case they are willing to use them The use of these templates would bring a certain level of security to the issuing institutions as the templates are perceived to reflect the expectations of the supervisory community on the practical implementation of the provisions laid down in the Capital Requirements Regulation (CRR), the Regulatory Technical Standards (RTS) and Q&As, based on the experience gained with the observations of issuances already made in the EU market.

The proposed templates are not legally binding and their use is optional. Where institutions decide not to use them, the concerned issuances (existing and future) would not be considered as non-compliant with regulatory requirements.

The draft update of the monitoring report and the draft standardised templates will be discussed during a public hearing to be held at the EBA premises on 26 July 2016 from 9:30 to 12:30 UK time.

Full news

EBA_draft report on AT1 templates - June 2016

EBA_draft AT1 templates – 2016

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