Regulatory Alerts2021-08-13
Added · Updated
Commission Delegated Regulation (EU) 2021/2155 on regulatory technical standards for instruments used in variable remuneration
The European Commission adopts regulatory technical standards specifying that Additional Tier 1, Tier 2, and Other Instruments may be used for variable remuneration if they contain trigger events for write-down or conversion when the Common Equity Tier 1 capital ratio falls below 7% of the product of 12.5 and own funds requirements. The regulation mandates that distributions be paid at least annually, prohibits secured instruments, and requires that conversion rates ensure the value of converted instruments does not exceed the initial award. Investment firms must ensure remaining maturity periods for Tier 2 instruments match deferral and retention periods, while Other Instruments must be issued directly or through consolidated entities to maintain a clear link to the firm's credit quality.