Page 48 - EBA 2015.1815 Annual report 2014 web 2

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future issuances. The EBA has reviewed
nine issuances, issued between August
2013 and May 2014, for a total amount
of EUR 11.6 billon. Three issuances were
made under a conversion mechanism,
and six under a temporary write-down
2. Although they are complex instruments,
issuances are in general quite stand-
ardised, except for features which are by
nature institutions’ specific (such as, for
example, the level of the triggers and the
definition of the triggers at different ap-
plicable levels depending on the structure
of the group). The monitoring process has
shown that a few provisions of existing
AT1 instruments or some currently un-
der consideration by prospective issuers
should be avoided in the future, or revised
wordings of those clauses should be used
to avoid uncertainty in relation to regula-
tory provisions or the high complexity of
the instruments. This may particularly be
the case for the loss absorption mecha-
nism, regulatory calls, share conversion
mechanisms, contingent clauses and cov-
The EBA’s technical advice to the
European Commission on delegated
In 2014, the EBA was requested by the Com-
mission to provide technical advice to the
Commission on delegated legislation stem-
ming from the CRR and CRD and also from
the BRRD. The Commission sought technical
advice so that it can report back to the Parlia-
ment and the Council on specific topics and
propose changes where necessary.
Under CRD
The EBA advised on delegated acts relating
to the following regulatory topics: own funds,
remuneration, credit risk, prudential filter for
fair value gains and use of waivers under Pillar
1 and Pillar 2.
Regarding securitisation, the EBA provided an
opinion on the appropriateness of the risk re-
tention, due diligence and disclosure require-
ments and its multiple components, such as
the type of retainer, the forms of retention or
the level of net economic interest retained.
The EBA also published a detailed report on
the European covered bonds frameworks,
identifying a series of best practices ensuring
a robust and consistent regulatory framework
for covered bonds. The report provided a posi-
tive opinion on the preferential capital treat-
ment of covered bonds.
In addition, the EBA published an opinion on
the macroprudential tools laid down in the
CRRCRDIV. This opinion informs the Commis-
sion on whether these macroprudential rules
are effective, efficient and transparent as well
as the possible degrees of overlap across
different macroprudential tools and the con-
sistency of the EU framework with global
standards. The Opinion also included policy
recommendations addressed to the Commis-
sion to consider in its review of the macropru-
dential toolkit when the Commission reports
to the European Parliament and the Council.
The EBA published an opinion on whether the
use of waivers in the area of Pillar 1 and Pillar
2 are consistently applied, whether the waivers
are prudentially justified and whether clari-
fications or legislative changes are needed.
The EBA liaised with competent authorities to
provide an opinion and the conclusions of this
report were submitted to the EC who used the
EBA opinion as input into discussions of their
Expert Group on Banking, Payment and Insur-
ance on this topic.
In March 2014, the EBA published a specific
impact assessment based on the EU volun-
tary Quantitative Impact Study (QIS) exercise
that examines the revisions in the treatment
of the leverage ratio provisions within the EU
context. The EBA analysis recommended that
the CRR definition of the leverage ratio should
Ongoing activity
In 2015, the EBA is also expected to deliver an advice on
the appropriateness of eligible capital applied for the pur-
poses of Title III Part Two and Part Four.