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Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

You are viewing the version of the document as on 2021-01-01.

Status: In this content, we have included all amendments made by EU exit-related instruments up to end September 2020. There will be more amendments to be made later this year, further to the September QCP.

Article 2 Conditions for classes of Additional Tier 1 instruments

Classes of Additional Tier 1 instruments shall comply with the following conditions:

  1. (a)

    the provisions governing the instrument shall specify a trigger event for the purpose of point (n) of Article 52(1) of Regulation (EU) No 575/2013;

  2. (b)

    the trigger event referred to in point (a) occurs when the Common Equity Tier 1 capital ratio of the institution issuing the instrument, referred to in point (a) of Article 92(1) of Regulation (EU) No 575/2013, falls below either of the following:

    1. (i)

      7 %;

    2. (ii)

      a level higher than 7 %, where determined by the institution and specified in the provisions governing the instrument;

  3. (c)

    one of the following requirements is met:

    1. (i)

      the instruments are issued for the sole purpose of being awarded as variable remuneration and the provisions governing the instrument ensure that any distributions are paid at a rate which is consistent with market rates for similar instruments issued by the institution or by institutions of comparable nature, scale, complexity and credit quality and which in any case is, at the time the remuneration is awarded, no higher than 8 percentage points above the annual percentage rate of change of the Consumer Prices Index (for all items) published by the Statistics Board. Where the instruments are awarded to staff members who perform the predominant part of their professional activities outside the United Kingdom and the instruments are denominated in a currency issued by a third country, institutions may use a similar independently-calculated index of consumer prices produced in respect of that third country;

    2. (ii)

      at the time of the award of the instruments as variable remuneration, at least 60 % of the instruments in issuance were issued other than as an award of variable remuneration and are not held by the following or by any undertaking that has close links with the following:

      • the institution or its subsidiaries,
      • the parent undertaking of the institution or its subsidiaries,
      • the parent financial holding company or its subsidiaries,
      • the mixed activity holding company or its subsidiaries,
      • the mixed financial holding company and its subsidiaries.