On 24 June 2021, the European Banking Authority (EBA) updated its report on the monitoring of Additional Tier 1 (AT1) instruments including an update on the monitoring of the implementation of the EBA’s opinion on legacy instruments and its considerations on environmental, social and governance (ESG) capital bonds. The objective of the update is to further strengthen the robustness and quality of EU institutions’ own funds and eligible liabilities instruments.

The legal basis for the update is Article 80 of the Capital Requirements Regulation (CRR) which provides that the EBA shall monitor the quality of own funds and eligible liabilities instruments issued by institutions across the EU and shall notify the European Commission immediately where there is significant evidence that those instruments do not meet the eligibility criteria set out in the Regulation. The CRR sets out eligibility criteria for AT1 instruments (in particular Articles 51 to 55). Those criteria are supplemented by Commission Delegated Regulation (EU) No 241/2014 (Regulatory Technical Standards on own funds).

The report is structured as follows:

  • The EBA’s considerations on AT1 monitoring.
  • Follow-up of the EBA opinion on legacy instruments.
  • The EBA’s considerations on own funds or eligible liabilities instruments with ESG features.

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