On 21 July 2023, the European Banking Authority (EBA) published a report which provides an update on the monitoring of Additional Tier 1 (AT1), Tier 2 and total loss-absorbing capacity / minimum requirement for own funds and eligible liabilities (TLAC/MREL) instruments of EU institutions.

The report merges the contents of the AT1 monitoring report published in June 2021 and the EBA report on the recent monitoring of TLAC/MREL eligible liabilities instruments published in October 2022. As such the report informs external stakeholders about the continuing work performed by the EBA in terms of monitoring the issuances of AT1 and Tier 2 capital instruments as well as of TLAC/MREL eligible liabilities instruments.

The report:

  • Lays out findings that are applicable to AT1 instruments, Tier 2 instruments, and eligible liabilities instruments for the purpose of loss absorbency needs. It further highlights aspects applicable only to one of these specific categories.
  • Integrates a dedicated part on environmental, social and governance capital bonds(i.e., bonds issued for own funds or eligible liabilities purposes), that replicates the preliminary observations originally published in the previous TLAC/MREL and AT1 monitoring reports. This guidance is valid with no distinction between any type of loss-absorbing regulatory instruments.
  • Provides insight into areas for further scrutiny/monitoring or potential EBA guidance going forward.