EBA欧洲银行-AT1-report_10页_240kb

EBA Report Summary: Monitoring of Additional Tier 1 (AT1) Instruments of EU Institutions

Core Content

The European Banking Authority (EBA) has published a report to monitor the quality of Additional Tier 1 (AT1) instruments issued by EU institutions. The report outlines the preliminary findings and recommendations based on the assessment of existing and potential future AT1 issuances. The EBA's monitoring is conducted under Article 80 of Regulation (EU) No 575/2013 (CRR), which mandates the review of own funds instruments across the EU. The report also highlights the EBA's efforts to establish a common interpretation of the CRR and its Regulatory Technical Standards (RTS).

Main Views and Key Information

Purpose of the Report

• To provide an overview of the preliminary work on monitoring AT1 instruments.
• To present the first results of the monitoring process.
• To highlight areas where the EBA believes revisions or avoidance of certain provisions are necessary.

Scope of Monitoring

• The EBA has reviewed nine AT1 issuances with a total value of EUR 11.6 billion, issued between August 2013 and May 2014.
• Three of these were issued under a conversion mechanism, and six under a temporary write-down mechanism.
• The monitoring is at an early stage and is expected to evolve with further issuances and iterations.

Key Findings

• Regulatory Calls: The EBA recommends full regulatory calls only, as partial calls may not be applicable under the current CRR rules. It also notes that tax calls may be acceptable if they are based on a material effect of tax treatment changes.
• Write-Down or Conversion: The EBA suggests that one cent floors on write-downs may be problematic due to legal implications. It also highlights that permanent write-downs should be used only if they do not contradict the CRR’s requirement for conversion.
• Share Conversion Clauses: The EBA advises against share conversion clauses that give shareholders pre-emption rights, as they may complicate the loss absorption mechanism and are unnecessary in listed institutions.
• Formal Issues: The EBA emphasizes the need for clear and unambiguous wording in prudential provisions. It discourages the use of italicized text, unclear language, and references to 'applicable law' when the CRR or RTS already specify the requirements.
• Contingent Clauses: The EBA considers that contingent clauses, such as mandatory interest payments upon loss of AT1 status, are not necessary and may increase complexity.

Provisions for Future Issuances

• The EBA is concerned about provisions that allow for changes in trigger levels, as they may be interpreted as new issuances.
• It advises against complex or non-standard clauses that could raise doubts about the effectiveness of loss absorption mechanisms.
• The EBA is also working on guidance for covenants and gross-up clauses to ensure clarity and consistency.

Interpretation of CRR Provisions

• The EBA identifies differences in the interpretation of CRR provisions, particularly regarding triggers for loss absorption.
• It recommends that the available write-up amount should be based on the lower net income when multiple triggers are involved.
• For institutions with different trigger levels, the EBA is investigating how to ensure consistent loss absorption when both triggers are hit simultaneously.
• The EBA is also examining the calculation of CET1 for subsidiaries in third countries, as the CRR may be more stringent than Basel III in such cases.

Conclusion

The EBA aims to promote standardization and reduce complexity in AT1 instruments. It is committed to continuing its monitoring efforts, providing guidance through Q&A tools, and discussing findings with stakeholders. The report is a preliminary step in ensuring that AT1 instruments meet the prudential requirements and are interpreted consistently across the EU.