The European Banking Authority (EBA) has published an updated version of a report on the monitoring of additional Tier 1 (AT1) instruments of EU institutions. Compared with the first report released in May 2015, this latest report includes new provisions on triggers, calls/repurchases/redemptions, tax events and gross-up provisions and on conversion and write-down mechanisms.

The report is based on the review of 33 AT1 issuances from EU institutions, which took place between August 2013 and December 2015 and reflects the obligation placed on the EBA in Article 80 of the Capital Requirements Regulation (CRR) to monitor the quality of own funds instruments issued in the EU. The purpose of the report is to inform stakeholders about the EBA’s continuing work to monitor the issuances of AT1 instruments and to present the results of this monitoring.

In parallel to the report, the EBA has published standardised terms and conditions for AT1 issuances that are meant to cover the prudential aspects of the terms and conditions. They contain essential and optional provisions concerning in particular flexibility of payments, permanence, and loss absorbency and are based on the most commonly observed loss absorption mechanisms.

The use of these templates would bring a certain level of security to the issuing institutions as the templates are perceived to reflect the expectations of the supervisory community on the practical implementation of the provisions laid down in the CRR, the regulatory technical standards and Q&As, based on the experience gained with the observations of issuances already made in the EU market.

View EBA updated report on monitoring of AT1, 11 October 2016

View EBA standardised templates for AT1 instruments, 11 October 2016

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