On 9 September 2019, the European Banking Authority (EBA) announced that it intends to provide clarity on the appropriate treatment of legacy instruments at the end of 2021.

When the Capital Requirements Regulation (CRR) entered into force, grandfathering provisions were introduced to ensure that institutions had sufficient time to meet the requirements set out by the new definition of own funds. Certain capital instruments that, at the time, did not comply with the new definition of own funds were grandfathered for a transition period with the objective of phasing them out from own funds. The grandfathering provisions end on 31 December 2021.  At this time the EBA intends to provide clarity on the appropriate end treatment of such capital instruments to ensure the consistent application of rules and practices. The EBA will also clarify the interaction with the new grandfathering provisions introduced by the recent Banking Package and the corresponding amendments to the CRR and the Bank Recovery and Resolution Directive where relevant for own funds instruments and eligible liabilities.