ID: 2023_6791 – Permission to reduce own funds or eligible liabilities and deduction rules in the context of a liability management exercise (exchange offer, tender offer or issuance of a replacement instrument concurrent with a tender offer on the existing instrument), ID: 2023_6776 – ESG P3- Template 7 – Adapted activities and enabling activities in Climate Change Adaptation (CCA), ID: 2023_6692 – C43.00 (LR4) – Reporting of RWA for positions in CIUs

EBA has published 3 new Q&As regarding issues relating to the CRR:
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2023_6776 – Transparency and Pillar 3 – ESG P3- Template 7 – Adapted activities and enabling activities in Climate Change Adaptation (CCA)
This question pertains to the CRR on transparency and Pillar 3 reporting. It asks whether adapted activities and enabling activities related to CCA should be considered mutually exclusive when filling out Template 7. The background highlights inconsistencies in the regulation, and the final answer clarifies that they are not mutually exclusive, explaining the criteria for climate change adaptation activities and their reporting.
QUESTION: When filling the Template 7, should adapted activities and enabling activities be considered as mutually exclusive?
ANSWER:
Article 11(1) of the EU Taxonomy defines economic activities contributing to climate adaptation. It can either reduce the activity’s climate risk or prevent/reduce harm to people, nature, or assets without causing harm elsewhere. Enabling activities help others adapt.
In ESG reporting (Template 7), column j is for adapted activities (Article 11(1)(a)), and column k is for enabling activities (Article 16, including Article 11(1)(b)). Adapted and enabling activities are not mutually exclusive.
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2023_6692 – Supervisory reporting – Leverage ratio – C43.00 (LR4) – Reporting of RWA for positions in CIUs
This question relates to the CRR on supervisory reporting of the leverage ratio. It inquires about the calculation of RWA for positions in CIUs for the purpose of reporting columns in template C43.00. The final answer explains that CIUs investments should be considered in the relevant line items for RWA based on the risk-based framework.
QUESTION: What value for RWA shall institutions report for positions in CIU considering that the look-through approach shall not be used for Leverage Ratio purposes?
ANSWER:
Template C 43.00 provides an alternative breakdown of leverage ratio exposure components. Row r0290 includes „other exposures,“ and you should report risk-weighted exposure values for specific asset categories as per EU Regulation 2021/451 instructions, using the risk-based framework. This includes investments in CIUs in line items mentioning RWEA.
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2023_6791 – Own funds – Permission to reduce own funds or eligible liabilities and deduction rules in the context of a liability management exercise (exchange offer, tender offer or issuance of a replacement instrument concurrent with a tender offer on the existing instrument)
This question concerns EU regulations on own funds and liability management exercises. It seeks clarification on when deductions from own funds and eligible liabilities should occur in the context of a liability management exercise. The final answer states that deductions should occur when the new issuance is effective and provides specific guidance based on the type of prior permission requested.
QUESTION: Should deductions from own funds and eligible liabilities with regards to a permission to reduce own funds or eligible liabilities in accordance with Article 77 of Regulation (EU) No 575/2013 (CRR) in the context of a liability management exercise (exchange offer, tender offer or issuance of a replacement instrument concurrent with a tender offer on the existing instrument), rather than upon the exercise of a call option, be made right after the permission from the competent authority / resolution authority is granted or could it be later at the time of the institution’s public announcement of the liability management exercise in accordance with Article 28(2) of the RTS on Own Funds? In that context, how should the concept of ‘sufficient certainty’ of Article 28(2) RTS be applied?
ANSWER:
EBA clarified rules regarding financial instruments with call options. Deductions for these instruments only happen when a call is announced to holders. In cases where the bank plans to repurchase its own instruments, they must be replaced before or at the same time as the repurchase. If both are included in own funds simultaneously, it requires permission from the competent authority. These rules also apply to eligible liability instruments.