1.The competent authority shall grant permission for an institution to reduce, repurchase,call, callredeem, repay or redeemrepurchase Common Equity Tier 1, Additional Tier 1 or Tier 2 instrumentsinstruments, or to reduce, distribute or reclassify related share premium accounts, where either of the following conditions is met:
(a)earlier thanbefore or at the same time as any of the actionactions referred to in Article 77,77(1), the institution replaces the instruments or the related share premium accounts referred to in Article 7777(1) with own funds instruments of equal or higher quality at terms that are sustainable for the income capacity of the institution;
(b)the institution has demonstrated to the satisfaction of the competent authority that the own funds and eligible liabilities of the institution would, following the action referred to in question,Article 77(1) of this Regulation, exceed the requirements laid down in Article 92(1) of this Regulation and the combined buffer requirement as defined in point (6) of Article 128 of DirectiveDirectives 2013/36/EU and 2014/59/EU by a margin that the competent authority mayconsiders consider necessary on the basis of Article 104(3) of Directive 2013/36/EU.necessary.
Where an institution provides sufficient safeguards as to its capacity to operate with own funds above the amounts required in this Regulation and in Directive 2013/36/EU, the competent authority may grant that institution a general prior permission to take any of the actions set out in Article 77(1) of this Regulation, subject to criteria that ensure that any such future action will be in accordance with the conditions set out in points (a) and (b) of this paragraph. That general prior permission shall be granted only for a specified period, which shall not exceed one year, after which it may be renewed. The general prior permission shall be granted for a certain predetermined amount, which shall be set by the competent authority. In the case of Common Equity Tier 1 instruments, that predetermined amount shall not exceed 3 % of the relevant issue and shall not exceed 10 % of the amount by which Common Equity Tier 1 capital exceeds the sum of the Common Equity Tier 1 capital requirements laid down in this Regulation, in Directives 2013/36/EU and 2014/59/EU by a margin that the competent authority considers necessary. In the case of Additional Tier 1 or Tier 2 instruments, that predetermined amount shall not exceed 10 % of the relevant issue and shall not exceed 3 % of the total amount of outstanding Additional Tier 1 or Tier 2 instruments, as applicable.
Competent authorities shall withdraw the general prior permission where an institution breaches any of the criteria provided for the purposes of that permission.
2.When assessing under point (a) of paragraph 1 the sustainability of the replacement instruments for the income capacity of the institution,institution referred to in point (a) of paragraph 1, competent authorities shall consider the extent to which those replacement capital instruments would be more costly for the institution than those capital instruments or share premium accounts they would replace.
3.Where an institution takes an action referred to in point (a) of Article 7777(1) and the refusal of redemption of Common Equity Tier 1 instruments referred to in Article 27 is prohibited by applicable national law, the competent authority may waive the conditions laidset downout in paragraph 1 of this ArticleArticle, provided that the competent authority requires the institution to limit the redemption of such instruments on an appropriate basis.
4.The competentCompetent authorities may permit institutions to redeemcall, redeem, repay or repurchase Additional Tier 1 or Tier 2 instruments beforeor related share premium accounts during the five years offollowing thetheir date of issue onlyissuance where the conditions laidset downout in paragraph 1 and point (a) or (b)one of thisthe paragraphfollowing areconditions is met:
(a)there is a change in the regulatory classification of those instruments that would be likely to result in their exclusion from own funds or reclassification as aown funds of lower quality form of own funds,quality, and both the following conditions are met:
(i)the competent authority considers such a change to be sufficiently certain;
(ii)the institution demonstrates to the satisfaction of the competent authoritiesauthority that the regulatory reclassification of those instruments was not reasonably foreseeable at the time of their issuance;
(b)there is a change in the applicable tax treatment of those instruments which the institution demonstrates to the satisfaction of the competent authoritiesauthority is material and was not reasonably foreseeable at the time of their issuance.issuance;
(c)the instruments and related share premium accounts are grandfathered under Article 494b;
(d)before or at the same time as the action referred to in Article 77(1), the institution replaces the instruments or related share premium accounts referred to in Article 77(1) with own funds instruments of equal or higher quality at terms that are sustainable for the income capacity of the institution and the competent authority has permitted that action on the basis of the determination that it would be beneficial from a prudential point of view and justified by exceptional circumstances;
(e)the Additional Tier 1 or Tier 2 instruments are repurchased for market making purposes.
5.EBA shall develop draft regulatory technical standards to specify the following:
(a)the meaning of sustainable‘sustainable for the income capacity of the institution;institution’;
(b)the appropriate bases of limitation of redemption referred to in paragraph 3;
(c)the process including the limits and procedures for granting approval in advance by competent authorities for an action listed in Article 77(1), and data requirements for an application by an institution for the permission of the competent authority to carry out an action listed in Article 77,therein, including the process to be applied in the case of redemption of shares issued to members of cooperative societies, and the time period for processing such an application.
EBA shall submit those draft regulatory technical standards to the Commission by 28 July 2013.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.