The European Banking Authority has published the final draft of the Regulatory Technical Standards (RTS) in own funds and eligible liabilities.
The regulator claims since the RTS on own funds has come into force, it has significantly enhanced regulatory harmonisation of prudential rules and contributed to strengthening the quality of regulatory capital.
It hopes the amended RTS and the revised Capital Requirements Regulation (CRR), which introduces new criteria and requirements for eligible liabilities, will capture several aspects of eligible liabilities and changes to funds framework.
The draft RTS aligns with existing provisions to change introduced within the revised CRR, the EBA said.
This new draft also specifies some of the newly introduced criteria for eligible liabilities instruments derived from the own funds regime. These include the absence of direct of indirect funding for the acquisition of ownership of eligible liabilities, the absence of incentives to redeem, the need for the resolution authority’s prior permission for the reduction of eligible liabilities.
Furthermore, the threshold for determining the predetermined amount for the general prior permission for reducing eligible liabilities instruments was increased from 3% to 10% of the total amount of outstanding eligible liabilities instruments. This move followed feedback from a public consultation.
Finally, the final draft RTS recognises some relief for the renewal of general prior permission both for own funds and eligible liabilities.
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