Question
When calculating the amount of Common Equity Tier 1 (CET 1) that is multiplied by 10%/17.65% for the purposes of threshold exemptions for deductions, should grandfathered instruments be included in the amount of CET1 to the extent that they qualify as CET 1 during the grandfathering period?
Background on the question
For example, if an institution had €10bn CET 1 (post deductions) excluding grandfathered instruments and had an additional €2bn grandfathered CET 1 that was eligible as a State aid instrument under Article 483 (or other instrument under Article 484), should the 10% threshold come to €1bn or €1.2bn until 31 December 2017?
Answer
Common Equity Tier 1 (CET1) instruments that are eligible for grandfathering under Articles 483 and 484 of Regulation (EU) No. 575/2013 may be included in CET1 items for the purposes of calculating thresholds for exemptions from deduction.