CRR review: EBA publishes opinion on own funds

The EBA has published an opinion on own funds in the context of the review of the CRR and Capital Requirements Directive (CRD 4), proposals on which were published by the EU Commission in November 2016, and the consultation on the operation of the European Supervisory Authorities (ESAs).

Under the CRR, the EBA monitors the quality of own funds instruments issued by institutions and, since 2013, the EBA has continuously been monitoring the quality of Common Equity Tier 1 (CET1) instruments and Additional Tier 1 (AT1) instruments in the EU. The opinion sets out the EBA's view on possible reinforcement of the EBA's role in terms of the evaluation of the compliance of CET1 instruments to ensure the enforceability of the CRR and provisions in the regulatory technical standards (RTS) for CET1 instruments for all institutions in the EU.

The opinion also elaborates on:

• restrictions of distributions with regard to the Maximum Distributable Amount (MDA) and its definition;
• the reduction, redemption and repurchase of capital instruments;
• the introduction of an anti-circumvention principle; and
• a point of non-viability criterion.

The opinion is addressed to the EU Commission, EU Parliament and EU Council.