The EBA publishes final draft amending technical standards shortening the timing for the application for prior permission to reduce own funds and eligible liabilities instruments

The European Banking Authority (EBA) today published its final draft amending Regulatory Technical Standards (RTS) on own funds and eligible liabilities shortening the timeframe for competent and resolution authorities to process institution's applications to reduce own funds and eligible liabilities instruments from four to three months. The EBA concluded that authorities now have sufficient experience with these procedures to carry out the assessments more efficiently.

The targeted amendments to the Commission Delegated Regulation on own funds and eligible liabilities, therefore, aim to deliver immediate benefits by reducing unnecessary regulatory burden for institutions. In addition, following the exemption introduced by Directive (EU) 2024/1174 (the Daisy Chain Act), which removes the requirement for liquidation entities to obtain prior permission to reduce eligible liabilities instruments, the RTS provisions setting a simplified procedure for these entities have been deleted.

Legal basis and background

Articles 78 and 78a of Regulation (EU) No 575/2013, as amended by Regulation (EU) 2019/876, mandate the EBA to develop regulatory technical standards specifying, among other elements, the process, time limits, procedures and information requirements for authorities to approve reductions of own funds and eligible liabilities instruments.

The 2021 update of the RTS extended the assessment period from three to four months. Based on the experience gained since then, the EBA now proposes to revert to a three-month timeframe.