This chapter describes transitional arrangements applying to certain capital instruments, as well as transitional arrangements that may be used by jurisdictions applying expected credit loss accounting.

Version effective as of 03 Apr 2020

Amended transitional arrangements for the regulatory capital treatment of ECL accounting as set out in the 3 April 2020 publication.

Transitional arrangements for certain capital instruments

90.1 Capital instruments that no longer qualify as non-common equity Tier 1 or Tier 2 capital are phased out beginning 1 January 2013. Fixing the base at the nominal amount of such instruments outstanding on 1 January 2013, their recognition is capped at 90% from 1 January 2013, with the cap reducing by 10 percentage points in each subsequent year.

90.2 This cap is applied to Additional Tier 1 and Tier 2 separately and refers to the total amount of instruments outstanding that no longer meet the relevant entry criteria. To the extent an instrument is redeemed, or its recognition in capital is amortised, after 1 January 2013, the nominal amount serving as the base is not reduced.

FAQ

FAQ1

If a Tier 2 instrument eligible for transitional arrangements begins its final five-year amortisation period prior to 1 January 2013, does it carry on amortising at a rate of 20% per annum after 1 January 2013?

Individual instruments continue to be amortised at a rate of 20% per year while the aggregate cap is reduced at a rate of 10% per year.