EC decides not to endorse EBA amendments to RTS on own funds and eligible liabilities instruments

The Council of the European Union has published a note (dated 20 July) containing a letter from the European Commission (EC) to the European Banking Authority (EBA) concerning the final draft regulatory technical standards (RTS) developed by the EBA amending Commission Delegated Regulation (EU) No 241/2014 on the timing of applications for prior permission to reduce own funds and eligible liabilities instruments under Articles 78 and 78a of the Capital Requirements Regulation (Regulation 575/2013). The proposed amendments would have shortened the timeframe for competent and resolution authorities to process an institution's application to reduce own funds and eligible liabilities instruments from four to three months.

However, the EC explains in the letter that it has decided that it will not endorse the draft RTS in their current form. The EC states that it would not be proportionate to revise the existing RTS at this stage only for this issue, in particular, as a number of competent and resolution authorities have already publicly stated their intention to provide, in certain circumstances and under certain conditions, such approvals within significantly shorter timeframes than the currently proposed three months. While the EC acknowledges the EBA's intent to contribute to the broader simplification agenda, it notes the EBA has already launched a broader, more far-reaching review of the prior permission regime, which the EC considers more appropriate towards genuine simplification. The EC highlights that an incremental amendment of such limited scope would in all likelihood necessitate reopening the same Level 2 act within a short period of time. The EC urges the EBA to consolidate the proposed adjustment and any further simplification measures into its ongoing comprehensive review so that the framework may be revised once, coherently, and with lasting effects. The EC confirms that the EBA may, within six weeks (by 31 August), resubmit a revised draft of the RTS in the form of a formal opinion; failing that, the draft RTS will be considered formally rejected by the EC.

Return to main website.