10
Permissions for reduction of own funds instruments and share premiums
10.1
CRR Article 77(1)(c) requires firms to seek the PRA’s prior permission to effect the call, redemption, repayment or repurchase of Additional Tier 1 instruments or Tier 2 instruments as applicable, prior to the date of their contractual maturity.
- 01/01/2023
10.2
For clarity, the PRA expects firms to seek prior permission for any forms of reductions of own funds instruments, including cancellation or conversion of a capital instrument (except for conversions of AT1 instruments at a predetermined automatic trigger, or conversion of capital instruments at the point of non-viability), de-recognising an instrument as own funds, or any transactions that would have the effect of reducing a firm’s own funds instruments and related share premiums.
- 01/01/2023
10.3
The PRA has a statutory duty to publish all permissions, including permissions granted to firms to reduce own funds instruments, unless the PRA considers such publication unnecessary or inappropriate. The PRA generally accepts firms’ requests to co-ordinate this publication with a firm’s announcement of the capital reduction transaction. As such, the PRA expects firms to inform their usual supervisory contact as soon as there is sufficient certainty regarding the capital reduction transaction to enable the PRA to publish the relevant permissions accordingly. For general prior permissions granted under CRR Article 78(1), the PRA expects firms to notify the PRA every quarter regarding transactions taken under the permission.
- 01/01/2023