Art. 63 · Tier 2 instruments

Previous version, in force 26 April 2019 02013R0575-20190426 → this version, in force 27 June 2019 02013R0575-20190627

Article 63 Tier 2 instruments Capital instruments and subordinated loans shall qualify as Tier 2 instruments instruments, provided that the following conditions are met: (a) the instruments are directly issued or the subordinated loans are raised, as applicable, by an institution and fully paid-up; paid up; (b) the instruments are not purchased or the subordinated loans are not granted, as applicable, owned by any of the following: (i) the institution or its subsidiaries; (ii) an undertaking in which the institution has participation in the form of ownership, direct or by way of control, of 20 % or more of the voting rights or capital of that undertaking; (c) the purchase acquisition of ownership of the instruments or the granting of the subordinated loans, as applicable, is not funded directly or indirectly by the institution; (d) the claim on the principal amount of the instruments under the provisions governing the instruments or the ranks below any claim of the principal amount of the subordinated loans under the provisions governing the subordinated loans, as applicable, is wholly subordinated to claims of all non-subordinated creditors; from eligible liabilities instruments; (e) the instruments are not secured or subordinated loans, as applicable, are neither secured, nor not subject to a guarantee that enhances the seniority of the claim by any of the following: (i) the institution or its subsidiaries; (ii) the parent undertaking of the institution or its subsidiaries; (iii) the parent financial holding company or its subsidiaries; (iv) the mixed activity holding company or its subsidiaries; (v) the mixed financial holding company or its subsidiaries; (vi) any undertaking that has close links with entities referred to in points (i) to (v); (f) the instruments or subordinated loans, as applicable, are not subject to any arrangement that otherwise enhances the seniority of the claim under the instruments or subordinated loans respectively; instruments; (g) the instruments or subordinated loans, as applicable, have an original maturity of at least five years; (h) the provisions governing the instruments or subordinated loans, as applicable, do not include any incentive for their principal amount to be redeemed or repaid, as applicable by the institution prior to their maturity; (i) where the instruments or subordinated loans, as applicable, include one or more call options or early repayment options, as applicable, including call options, the options are exercisable at the sole discretion of the issuer or debtor, as applicable; issuer; (j) the instruments or subordinated loans, as applicable, may be called, redeemed redeemed, repaid or repurchased or repaid early only where the conditions laid down set out in Article 77 are met, and not before five years after the date of issuance or raising, as applicable, issuance, except where the conditions laid down set out in Article 78(4) are met; (k) the provisions governing the instruments or subordinated loans, as applicable, do not indicate explicitly or implicitly that the instruments or subordinated loans, as applicable, would or might be called, redeemed, repaid or repurchased or repaid early, as applicable applicable, by the institution other than in the case of the insolvency or liquidation of the institution and the institution does not otherwise provide such an indication; (l) the provisions governing the instruments or subordinated loans, as applicable, do not give the holder the right to accelerate the future scheduled payment of interest or principal, other than in the case of the insolvency or liquidation of the institution; (m) the level of interest or dividend dividends payments, as applicable, due on the instruments or subordinated loans, as applicable, will not be amended on the basis of the credit standing of the institution or its parent undertaking; (n) where the issuer is established in a third country and has been designated in accordance with Article 12 of Directive 2014/59/EU as part of a resolution group the resolution entity of which is established in the Union or where the issuer is established in a Member State, the law or contractual provisions governing the instruments require that, upon a decision by the resolution authority to exercise the write-down and conversion powers referred to in Article 59 of that Directive, the principal amount of the instruments is to be written down on a permanent basis or the instruments are to be converted to Common Equity Tier 1 instruments; where the issuer is established in a third country and has not been designated in accordance with Article 12 of Directive 2014/59/EU as a part of a resolution group the resolution entity of which is established in the Union, the law or contractual provisions governing the instruments require that, upon a decision by the relevant third-country authority, the principal amount of the instruments is to be written down on a permanent basis or the instruments are to be converted into Common Equity Tier 1 instruments; (o) where the issuer is established in a third country and has been designated in accordance with Article 12 of Directive 2014/59/EU as part of a resolution group the resolution entity of which is established in the Union or where the issuer is established in a Member State, the instruments may only be issued under, or be otherwise subject to the laws of a third country where, under those laws, the exercise of the write-down and conversion powers referred to in Article 59 of that Directive is effective and enforceable on the basis of statutory provisions or legally enforceable contractual provisions that recognise resolution or other write-down or conversion actions; (p) the instruments are not issued directly by an institution, subject to set-off or where netting arrangements that would undermine their capacity to absorb losses. For the subordinated loans are not raised directly by an institution, as applicable, both purposes of point (a) of the following conditions are met: (i) first paragraph, only the instruments are issued or subordinated loans are raised, as applicable, through an entity, which is part of the consolidation pursuant capital instrument that is fully paid up shall be eligible to Chapter qualify as a Tier 2 of Title II of Part One; (ii) the proceeds are immediately available to the institution without limitation in a form that satisfies the conditions laid down in this paragraph. instrument.