Today, the EBA held a public hearing on the 4 May report on AT1 issuances, see my previous post on this. Click here for the PowerPoint that the EBA prepared.
Apparently no surprises. On the hot topic of Contingent Clauses, the EBA reports that it “confirms its previous reserves, and recommends disallowing contingent clauses”.
A recommendation, … fair enough.
There was something worth highlighting at the hearing: The EBA noted in reply to a question that the CRR required full flexibility on payment, and a narrow interpretation of the rules might conclude that contingent settlement clauses might violate this requirement.
While the Commission had not confirmed this interpretation of the CRR, there was a risk that instruments containing such clauses might face disqualification if the Commission ever took a view along those lines.
Indeed, EBA made a reference to art 52 1 (l) (iii), will soon update my post.
See the update: EBA refers to “at all times” 😉