When should the deduction of own funds be made?

Updated: Jul 27, 2018

The EBA has recently published an answer within the Q&A process, whether deductions from own funds with regard to a permission to reduce own funds in accordance with Article 77 CRR shall be made right after the permission from the competent authority (CA) is granted or whether it could be made later.

According to EBA, should pursuant to Article 28(2) of Regulation (EU) No 241/2014 (RTS on Own Funds requirement for institutions) the deduction from own funds be made from the moment the authorisation from the competent authority has been granted and the redemptions, reductions and repurchases are expected to take place with sufficient certainty.

In accordance with Q&A 2014_1352 sufficient certainty is deemed to exist from the moment the authorisation is granted.

In other words, the institution is obliged to reduce the own funds and to make the public announcement about the reduction immediately after the reduction has been granted by the relevant regulator.