The latest amendments to the Capital Requirements Directive (CRD) introduce explicit rules for the treatment of instruments eligible as capital and, in particular, requirements for their inclusion in institutions’ original own funds without limits. The amendments will have to be transposed into Member States’ national law by 31 October 2010 and will be first applied from 31 December 2010.
Article 57(a) of the CRD sets out which instruments – apart from reserves and retained earnings - are eligible for inclusion in an institution’s original own funds as capital.
The Committee of European Banking Supervisors (CEBS) has now published a Consultation Paper on implementation guidelines on capital instruments. The consultation is in response to Article 63a(6) of the CRD that requires CEBS to elaborate guidelines for the convergence of supervisory practices with regard to the instruments referred to in Article 57(a) of the CRD.
The deadline for comments on the Consultation Paper is 31 March 2010. CEBS will hold a public hearing at its premises in London on 23 February 2010.