The European Banking Authority (EBA) published its updated Report on the monitoring of Additional Tier 1 (AT1) instruments and proposed standardised templates for AT1 instruments.
Update of the AT1 monitoring report
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 on 29 May 2015, this final Report includes new provisions on triggers, calls/repurchases/redemptions, tax events and gross-up provisions and on conversion and write-down mechanisms.
Standardised templates for AT1 issuances
The objective of these templates is to cover the prudential provisions of the AT1 issuances. They contain essential and optional provisions concerning in particular flexibility of payments, permanence, and loss absorbency and are based on the most commonly observed loss absorption mechanisms.
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.
Press release
EBA AT1 Report October 2016
EBA Final AT1 standard templates
© EBA
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