EBA欧洲银行-Guidelines_article57a_17页_249kb

Summary of Implementation Guidelines regarding Instruments referred to in Article 57(a) of Directive 2006/48/EC

Core Content

These guidelines are issued by the European Banking Authority (EBA) to implement the latest amendments to the Capital Requirements Directive (CRD) concerning instruments eligible as capital for inclusion in institutions' original own funds without limits. The amendments, which will be transposed into national law by 31 October 2010 and first applied from 31 December 2010, aim to harmonize supervisory practices across the EU.

The guidelines are structured into four main parts:

1. Definition of capital in the sense of Article 57(a) and Recital 4
2. Permanence of capital instruments
3. Flexibility of payments
4. Loss absorbency

The main goal is to ensure that instruments eligible under Article 57(a) are of high quality, fully loss-absorbing, and have the same subordination as ordinary shares in liquidation.

Main Points

1. Definition of Capital (Article 57(a) and Recital 4)

• Instruments eligible as capital under Article 57(a) are those that are regarded as equity capital under national law, rank pari passu with ordinary shares in liquidation, and fully absorb losses in going concern situations.
• Ordinary shares are the benchmark for assessing the eligibility of other instruments.
• Mutual and cooperative shares issued by non-joint-stock companies are considered equivalent to ordinary shares in terms of capital quality, especially regarding loss absorbency, provided they meet the eligibility criteria.
• Instruments not meeting these criteria are classified as hybrid instruments under Article 57(ca).

2. Permanence

• Capital instruments must be perpetual and not redeemable outside of liquidation.
• Redemption or buy-back of capital instruments is allowed only under specific conditions and requires prior approval from competent authorities.
• If redemption is announced with sufficient certainty, the corresponding amount is deducted from the original own funds until the actual redemption takes place.
• Competent authorities may refuse or limit redemptions if they determine that the institution's capital level is inadequate.

3. Flexibility of Payments

• Dividend payments must be fully discretionary, with no pre-indication of amounts.
• Dividends are paid out of distributable items and are not cumulative.
• Instruments with preferential dividend rights must not have a fixed or capped payment structure unless applicable to all instruments issued by non-joint-stock companies.
• A legal or statutory cap on payments is acceptable for non-joint-stock companies, provided it does not restrict the flexibility of payments and is applied uniformly across all eligible instruments.

4. Loss Absorbency

• Capital instruments must be able to fully absorb losses in going concern situations.
• They must be simple, clear, and immediately loss-absorbing.
• Instruments must not provide guarantees, pledges, or other credit enhancements that increase their seniority.
• In case of liquidation, capital instruments must rank pari passu with ordinary shares and have a proportional claim to residual assets.

Key Information

• Eligibility Criteria: CEBS has outlined 10 criteria for instruments to be eligible under Article 57(a), focusing on simplicity, loss absorbency, permanence, and flexibility of payments.
• No Voting Rights Requirement: While voting rights can contribute to market discipline, they are not a mandatory requirement for eligibility.
• Redemption Restrictions: Redemptions and buy-backs are not allowed unless approved by competent authorities and are subject to prior approval and conditions.
• Impact on Own Funds: Instruments that are likely to be redeemed or bought back must be deducted from original own funds to ensure accurate capital measurement.
• Implementation Deadline: The guidelines must be transposed into national law by 31 October 2010 and applied from 31 December 2010 onwards.
• Harmonization: The guidelines aim to ensure a consistent and harmonized approach across the EU, especially for non-joint-stock companies like cooperatives and mutuals.

Conclusion

The guidelines provide a comprehensive framework for the eligibility and treatment of capital instruments under Article 57(a) of Directive 2006/48/EC. They emphasize the importance of loss absorbency, permanence, and flexibility of payments, and ensure that such instruments are treated in a manner consistent with ordinary shares. The implementation is expected to be minimal in cost for the sector, with a focus on regulatory clarity and consistency.