Procedure for calculation of maximum distributable amount of equity

This decree establishes the procedure for the calculation of the maximum amount of equity that can be distributed by a credit institution.

The decree applies to all credit institutions that have been granted an authorisation in Estonia on a non-consolidated and consolidated basis.

(1) To calculate the maximum distributable equity amount, the credit institution multiplies an amount determined in accordance with subsection (3) by a factor determined in accordance with subsection (4).

(2) If the credit institution has made payouts specified in subsection 8650 (2) of the Credit Institutions Act after it has become evident that the combined capital buffer requirement has not been fulfilled and before the submission of the maximum distributable equity amount to the Estonian Financial Supervision Authority, the maximum distributable equity amount will be reduced by these payouts.

(3) The equity amount that is to be multiplied by a factor found in accordance with the procedure specified in subsection (1) and determined in subsection (4) includes the amounts specified in clauses 1) and 2) of this subsection less the related taxes that must be paid when equity amounts are not paid and they remain at the disposal of the credit institution

1) interim profit that, in accordance with Article 26(2) of the Regulation (EU) No 575/2013 of the European Parliament and of the Council (hereinafter Banking Regulation), is not included in Common Equity Tier 1 and that is earned after the last profit distribution proposal or after the making or deciding of the payouts specified in subsection 8650 (2) of the Credit Institution Act;

2) year-end profit that, in accordance with Article 26(2) of the Banking Regulation, is not included in Common Equity Tier 1 and that is earned after the last profit distribution proposal or after the making or deciding of the payouts specified in subsection 8650 (2) of the Credit Institution Act.

(4) The factor specified in subsection (1) is determined as follows

1) the factor is 0 if the Common Equity Tier 1 retained by the credit institution that is not used for fulfilling the own funds requirement set out in Article 92(1)(a), (b) and (c) of the Banking Regulation, nor for fulfilling the additional own funds requirements for risks other than excessive leverage in subsection 1042 of the Credit Institutions Act, and that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the first or lowest quartile of the combined buffer requirement;

2) the factor is 0.2 if the Common Equity Tier 1 retained by the credit institution that is not used for fulfilling the own funds requirement set out in Article 92(1)(a), (b) and (c) of the Banking Regulation, nor for fulfilling the additional own funds requirements for risks other than excessive leverage in subsection 1042 of the Credit Institutions Act, and that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the second quartile of the combined buffer requirement;

3) the factor is 0.4 if the Common Equity Tier 1 retained by the credit institution that is not used for fulfilling the own funds requirement set out in Article 92(1)(a), (b) and (c) of the Banking Regulation, nor for fulfilling the additional own funds requirements for risks other than excessive leverage in subsection 1042 of the Credit Institutions Act, and that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the third quartile of the combined buffer requirement;

4) the factor is 0.6 if the Common Equity Tier 1 retained by the credit institution that is not used for fulfilling the own funds requirement set out in Article 92(1)(a), (b) and (c) of the Banking Regulation, nor for fulfilling the additional own funds requirements for risks other than excessive leverage in subsection 1042 of the Credit Institutions Act, and that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the fourth or highest quartile of the combined buffer requirement.

(5) The lower and upper bounds of each quartile is calculated as follows

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Qn – the ordinal number of the quartile concerned.