- Question ID
-
2023_6919
- Legal act
- Regulation (EU) No 575/2013 (CRR)
- Topic
- Own funds
- Article
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3
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
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36
- Type of submitter
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Individual
- Subject matter
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Deductions from Common Equity Tier 1 items
- Question
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1. Bank owns usd 20 million worth of 18% ordinary shares of a financial institution Alpha Bank. Alpha Bank has also invested usd 12 million to this bank's CET1 in order to artificially inflate the capital of both banks. When calculating regulatory capital, USD 12 million reciprocal cross-holding was deducted from CET1. Now, when the bank calculates adjustments for investments in the capital of financial entities, should it count the investment in Alpha Bank as 8 million, and even if so, will it be considered a significant investment or an insignificant investment?
2. Bank has a wholly owned subsidiary, Valeria Ltd, which is a non-financial entity. Valeria Ltd holds 100% of the shares of Karina Insurers, which is a financial institution. Should the bank now consider this as a significant investment (here indirect) in a financial institution and make deductions accordingly, or should the bank consider only Valeria Ltd in deductions (alternatively 1250% RW) as a qualifying non-financial holding? If the first option is the correct answer, should it ignore the investment in Valeria Ltd?
3. A bank has 100 million CET1 and 10 million AT1 capital. The bank then invests 50 mln to buy 100% of an insurance company that holds the bank's 10 mln AT1. When recalculating the regulatory capital, the bank deducts 40 mln (50 - 100*10%) from CET1 as an investment in financial sector entities above the 10% threshold. Now, when calculating AT1, should the bank make an adjustment to 10 mln AT1 because it is considered an investment in own capital? If so, how much?
- Background on the question
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All questions are related to Article 36 of 575/2013
- Submission date
- Rejected publishing date
-
- Rationale for rejection
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This question has been rejected because it is out of scope of the Q&A process /tool and does not relate to the legislative acts referred to in Article 1(2) of the EBA Regulation and their associated delegated and implementing acts, guidelines and recommendations. The Single Rule Book Q&A tool has been established to provide explanations and non-binding interpretations on questions relating to the practical application or implementation of the provisions of legislative acts referred to in Article 1(2) of the EBA’s founding Regulation, as well as associated delegated and implementing acts, and guidelines and recommendations, adopted under these legislative acts. For further information on the purpose of this tool and on how to submit questions, please see 'Additional background and guidance for asking questions'.
- Status
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Rejected question