The European Banking Authority (EBA) has published final draft regulatory technical standards (RTS) on own funds (Part IV).

The RTS relate to article 28(5) of the Capital Requirements Regulation (CRR) which mandates the EBA to specify whether and when multiple distributions would constitute a disproportionate drag on own funds, and the meaning of preferential distributions.

In the area of own funds, the EBA’s mandate is twofold: one is related to multiple distributions and the other one to preferential distributions, which have been considered separately for joint-stock companies and non-joint stock companies. The provisions of the RTS provide detail in particular on whether and when multiple distributions would create a disproportionate drag on capital and clarify the meaning of preferential distributions – namely preferential rights to payments of distributions and order of payments for distribution. The RTS also deal with the consequences of not meeting the criteria provided for in the CRR in terms of (dis)qualification of instruments as common equity tier 1 capital.

The final ITS and RTS have been sent to the European Commission for their adoption as EU Regulations that will be applicable throughout the EU.

View EBA publishes final draft technical standards on own funds (Part IV), 27 March 2014