Shearman & Sterling LLP | FinReg | EU Clarification on Legacy Own Funds Instruments Coming in Mid-2020
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  • EU Clarification on Legacy Own Funds Instruments Coming in Mid-2020
    09/09/2019
    The European Banking Authority has announced that it will clarify by mid-2020 the position of instruments that were both issued and qualified as "own funds" for capital purposes before December 31, 2011. When the Capital Requirements Regulation entered into force, transitional provisions provided that these legacy instruments would also qualify as own funds instruments under the CRR, even if they did not meet the enhanced requirements for own funds introduced in that measure. The transitional period for such instruments ends on December 31, 2021. The EBA has stated that it will provide clarification on the appropriate treatment of the legacy instruments to ensure that banks maintain high quality regulatory capital and that the rules are consistently applied across the EU. The EBA confirms that it will take into account recent changes to own funds requirements in CRR II as well as other linked changes under the Bank Recovery and Resolution Directive.

    View the EBA's announcement.

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