ECB/2015/4 · GlobalLawDB

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THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,Having regard to Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions^note, and in particular Article 4(1)(d) and the second subparagraph of Article 4(3) thereof,Whereas:

(1)Article 26(2) of Regulation (EU) No 575/2013 of the European Parliament and of the Council^note has introduced a new procedure whereby the permission of the competent authority is required for the inclusion of interim profits or year-end profits in Common Equity Tier 1 (CET1) capital before an institution has taken a formal decision confirming the final profit or loss of the institution for the year. Such permission is granted where the following two conditions are met: profits have been verified by persons independent of the institution that are responsible for the auditing of the accounts of that institution; and the institution has demonstrated that any foreseeable charge or dividend has been deducted from the amount of those profits.

(2)Articles 2 and 3 of Commission Delegated Regulation (EU) No 241/2014^note specify the meaning of ‘foreseeable’ for the purposes of Article 26(2)(b) of Regulation (EU) No 575/2013.

(3)Commission Implementing Regulation (EU) No 680/2014^note lays down uniform requirements in relation to supervisory reporting.

(4)In accordance with Article 4(1)(d) of Regulation (EU) No 1024/2013, the European Central Bank (ECB) is the competent authority responsible for granting permission to credit institutions under its direct supervision to include interim or year-end profits in CET1 capital, where the abovementioned conditions are met.

(5)Taking into account the fact that Delegated Regulation (EU) No 241/2014 has harmonised the approach to the deduction of foreseeable dividends from interim or year-end profits for the purposes of granting the permission referred to in Article 26(2) of Regulation (EU) No 575/2013, permission to include interim or year-end profits in CET1 capital should be granted when certain conditions are met.

(6)In cases where the conditions to apply this Decision are not met the ECB will individually assess requests for permission to include interim or year-end profits in CET1 capital,

HAS ADOPTED THIS DECISION:

Defined terms · 8

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consolidated basis
has the same meaning as defined in point 48 of Article 4(1) of Regulation (EU) No 575/2013.
consolidating entity
means the credit institution which shall comply with the requirements laid down in Regulation (EU) No 575/2013 on consolidated basis or sub-consolidated basis, as applicable, in accordance with Articles 11 and 18 of Regulation (EU) No 575/2013.
credit institution
means a credit institution as defined in point 1 of Article 4(1) of Regulation (EU) No 575/2013 and which is supervised by the ECB.
interim profits
means profits as laid down in the applicable accounting framework, computed for a reference period shorter than a full financial year, and before the credit institution has taken a formal decision confirming such a profit or loss of the institution.
pay-out ratio at consolidated level
means the ratio between: (a) dividends, other than those paid in a form that does not reduce CET1 capital (e.g. scrip-dividends), distributed to owners of the consolidating entity;
pay-out ratio at solo level
means the ratio between: (a) dividends, other than those paid in a form that does not reduce CET1 capital (e.g. scrip-dividends), distributed to owners of the entity;
sub-consolidated basis
has the same meaning as defined in point 49 of Article 4(1) of Regulation (EU) No 575/2013.
year-end profits
means profits as defined in the applicable accounting framework, computed for a reference period equal to a full financial year, and before the credit institution has taken a formal decision confirming such a profit or loss of the institution.

Decision (EU) 2015/656 (ECB/2015/4)

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Defined terms · 8

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