Regulations, 2015

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,406, 10 ta’ April, 2015

L.N. 130 of 2015

BANKING ACT

(CAP. 371)

CRR (Implementing and Transitional Provisions)

Regulations, 2015

IN exercise of the powers conferred by article 3 of the Banking

Act, the Minister for Finance, acting on the advice of the Malta

Financial Services Authority, has made the following regulations:-

(1) The title of these regulations is the CRR Citation and

scope.

(Implementing and Transitional Provisions) Regulations, 2015.

(2) The purpose of these regulations is to implement Articles

49(1), 89(3), 124(2), 400(2), 465, 467, 468, 469, 471(1), 473(1),

474(a), 476(a), 478, 479, 480, 481, 486 and 493(3) of the CRR.

(1)

In these regulations, unless the context otherwise Interpretation.

requires -

"the Act" means the Banking Act;

"Additional Tier 1 capital" shall have the same meaning as that

assigned to it in Article 61 of the CRR;

"Additional Tier 1 items" shall consist of the items indicated in

Article 51 of the CRR;

"Common Equity Tier 1 capital" shall have the same meaning as

that assigned to it in Article 50 of the CRR;

"Common Equity Tier 1 capital ratio" shall be calculated in

accordance with point (a) of Article 92(2) of the CRR;

"Common Equity Tier 1 items" shall consist of the items

indicated in Article 26 of the CRR;

"CRR" means Regulation (EU) No 575/2013 of the European

Parliament and of the Council of 26 June 2013 on prudential

requirements for credit institutions and investment firms and

amending Regulation (EU) No 648/2012, as amended from time to

time, and includes any implementing measures that have been or may

be made thereunder;

"market value" shall have the same meaning as that assigned to

it in point (76) of Article 4(1) of the CRR;

"own funds instruments" shall have the same meaning as that

assigned to it in point (119) of Article 4(1) of the CRR;

"parent financial holding company" shall have the same

meaning as that assigned to it in point (30) or (31) of Article 4(1) of

the CRR;

"parent institution" shall have the same meaning as that

assigned to it in point (28) or (29) of Article 4(1) of the CRR;

"parent mixed financial holding company" shall have the same

meaning as that assigned to it in point (32) or (33) of Article 4(1) of

the CRR;

"Tier 1 capital" shall have the same meaning as that assigned to

it in Article 25 of the CRR;

"Tier 1 capital ratio" shall be calculated in accordance with

point (b) of Article 92(2) of the CRR;

"Tier 2 capital" shall have the same meaning as that assigned to

it in Article 71 of the CRR;

"Tier 2 items" shall consist of the items indicated in Article 62

of the CRR.

(2) Words and expressions used in these regulations which are

also used in the Act but which are not defined herein, shall have the

same meaning as in the Act.

For the purposes of calculating own funds on an individual

basis, a sub-consolidated basis and a consolidated basis, as an

alternative to the deduction of holdings of own funds instruments of a

financial sector entity in which the parent institution, parent financial

holding company or parent mixed financial holding company or

credit institution has a significant investment, the competent authority

shall permit credit institutions to apply method 1, 2 or 3 of Annex I to

Directive 2002/87/EC subject to the conditions laid down in Article

49(1) of the CRR. The method chosen shall be applied in a consistent

manner over time.

The competent authority shall apply the requirements laid

down in point (a) of Article 89(3) of the CRR to qualifying holdings

of credit institutions referred to in Article 89(1) and (2) of the CRR.

The competent authority shall, after consulting EBA, apply Exposures

stricter criteria than those set out in Article 125(2)(d) of the CRR, secured

mortgages on

which will be calculated in accordance with the criteria set out in immovable

property.

Article 124(2) of the CRR as specified by the regulatory technical

standards referred to in Article 124(4) of the CRR. In particular, the

part of the loan to which the 35% risk weight is assigned shall not

exceed 70% of the market value of the property in question.

(1) The competent authority shall fully exempt the Large

exposures listed in Article 400(2) of the CRR from the application of exposures.

Article 395(1) of the CRR where the conditions listed in Article

400(3) of the CRR are met.

(2) By way of derogation from Article 400(2) and (3) of the

CRR and in line with Article 493(3) of the CRR, for a transitional

period until the entry into force of any legal act following the review

in accordance with Article 507 of the CRR, but not after 31 December

2028, the exposures listed in Article 493(3) of the CRR shall be fully

exempt from the application of Article 395(1) of the CRR.

The competent authority shall apply an outflow rate of 5% Liqudity

for trade finance off-balance sheet related products as referred to in outflows.

Article 429 and Annex I of the CRR.

The own funds requirements that shall apply during the Own funds

requirements.

period from 1 January 2014 to 31 December 2014 shall be

(a)

a Common Equity Tier 1 capital ratio of 4.5%;

(b)

a Tier 1 capital ratio of 6%.

The applicable percentage for the purposes of Article Unrealised

losses measured

467(1) of the CRR shall be

at fair value.

(a)

100% during the period from 1 January 2014 to 31

December 2014;

(b) 100% during the period from 1 January 2015 to 31

December 2015;

(c)

100% during the period from 1 January 2016 to 31

December 2016; and

(d) 100% for the period from 1 January 2017 to 31

December 2017.

(1) The applicable percentage for the purposes of Unrealised gains

measured at fair

Article 468(1) of the CRR shall be

value.

(a)

60% during the period from 1 January 2015 to 31

December 2015;

(b) 40% during the period from 1 January 2016 to 31

December 2016; and

(c)

20% for the period from 1 January 2017 to 31

December 2017.

(2) The applicable percentage for the purposes of Article

468(4) of the CRR shall be

(a)

20% for the period from 1 January 2014 to 31

December 2014;

(b) 40% for the period from 1 January 2015 to 31

December 2015;

(c)

60% for the period from 1 January 2016 to 31

December 2016; and

(d) 80% for the period from 1 January 2017 to 31

December 2017.

(1) The applicable percentage for the purposes of

Article 469(1)(a) of the CRR as it applies to the items referred to in

points (a)-(b) of Article 36(1) of the CRR shall be

(a) 100% during the period from 1 January 2014 to 31

December 2014;

(b) 100% during the period from 1 January 2015 to 31

December 2015;

(c)

100% during the period from 1 January 2016 to 31

December 2016; and

(d) 100% for the period from 1 January 2017 to 31

December 2017.

(2) The applicable percentage for the purposes of Article

469(1)(a) of the CRR as it applies to the items referred to in points

(c)-(h) of Article 36(1) of the CRR excluding deferred tax assets that

rely on future profitability and arise from temporary differences shall

(a)

20% during the period from 1 January 2014 to 31

December 2014;

(b) 40% during the period from 1 January 2015 to 31

December 2015;

(c)

60% during the period from 1 January 2016 to 31

December 2016; and

(d) 80% for the period from 1 January 2017 to 31

December 2017.

(3) The applicable percentage for the purposes of Article

469(1)(c) of the CRR shall be

(a) 20% during the period from 1 January 2014 to 31

December 2014;

(b) 40% during the period from 1 January 2015 to 31

December 2015;

(c)

60% during the period from 1 January 2016 to 31

December 2016; and

(d) 80% for the period from 1 January 2017 to 31

December 2017.

(4) By way of derogation from sub-regulation (3) above, for

the items referred to in point (c) of Article 36(1) of the CRR that

existed prior to 1 January 2014, the applicable percentage for the

purpose of Article 469(1)(c) of the CRR shall be

(a) 0% during the period from 1 January 2014 to 31

December 2014;

(b) 10% during the period from 1 January 2015 to 31

December 2015;

(c)

20% during the period from 1 January 2016 to 31

December 2016;

(d) 30% during the period from 1 January 2017 to 31

December 2017;

(e)

40% during the period from 1 January 2018 to 31

December 2018;

(f)

50% during the period from 1 January 2019 to 31

December 2019;

(g)

60% during the period from 1 January 2020 to 31

December 2020;

(h) 70% during the period from 1 January 2021 to 31

December 2021;

(i)

80% during the period from 1 January 2022 to 31

December 2022;

(j)

90% during the period from 1 January 2023 to 31

December 2023.

The competent authority shall permit credit institutions to

not deduct equity holdings in insurance undertakings, reinsurance

undertakings and insurance holding companies where the conditions

laid down in Article 471 of the CRR are met.

The competent authority shall permit credit institutions to

add to their Common Equity Tier 1 capital the applicable amount in

accordance with Article 473(2) and (3) of the CRR, as applicable,

multiplied by the factor applied in accordance with Article 473(4) of

the CRR.

The applicable percentage for the purposes of Article

474(a) of the CRR shall be

(a) 20% during the period from 1 January 2014 to 31

December 2014;

(b) 40% during the period from 1 January 2015 to 31

December 2015;

(c)

60% during the period from 1 January 2016 to 31

December 2016; and

(d) 80% for the period from 1 January 2017 to 31

December 2017.

The applicable percentage for the purposes of Article

476(a) of the CRR shall be

(a) 20% during the period from 1 January 2014 to 31

December 2014;

(b) 40% during the period from 1 January 2015 to 31

December 2015;

(c)

60% during the period from 1 January 2016 to 31

December 2016; and

(d) 80% for the period from 1 January 2017 to 31

December 2017.

The applicable percentage for the purposes of Article Recognition in

consolidated

479(2) of the CRR shall be

Common Equity

Tier 1 capital of

instruments and

(a) 80% for the period from 1 January 2014 to 31 items that do not

December 2014;

qualify as

minority

interests.

(b) 60% for the period from 1 January 2015 to 31

December 2015;

(c)

40% for the period from 1 January 2016 to 31

December 2016; and

(d) 20% for the period from 1 January 2017 to 31

December 2017.

The applicable factor for the purpose of Article 480(1) of Recognition in

consolidated

the CRR shall be

own funds of

minority

0,2 in the period from 1 January 2014 to 31 interests

(a)

qualifying

December 2014;

Additional Tier

1 and Tier 2

capital.

(b) 0,4 in the period from 1 January 2015 to 31

December 2015;

(c)

0,6 in the period from 1 January 2016 to 31

December 2016; and

(d) 0,8 in the period from 1 January 2017 to 31

December 2017.

(1) The applicable percentage for the purposes of Additional

Article 481(1) of the CRR for the inclusion of unrealised gains filters

deductions.

measured at fair value in Tier 2 capital shall be

(a)

80% for the period from 1 January 2014 to 31

December 2014;

(b) 60% for the period from 1 January 2015 to 31

December 2015;

(c)

40% for the period from 1 January 2016 to 31

December 2016; and

(d) 20% for the period from 1 January 2017 to 31

December 2017.

(2) The applicable percentage for the purposes of Article

481(2) of the CRR for the period from 1 January 2014 to 31

December 2014 shall be 50%.

The applicable percentage for the purposes of Article

486(2), (3) and (4) of the CRR shall be

(a) 80% during the period from 1 January 2014 to 31

December 2014;

(b) 70% during the period from 1 January 2015 to 31

December 2015;

(c)

60% during the period from 1 January 2016 to 31

December 2016;

(d) 50% during the period from 1 January 2017 to 31

December 2017;

(e)

40% during the period from 1 January 2018 to 31

December 2018;

(f)

30% during the period from 1 January 2019 to 31

December 2019;

(g) 20% during the period from 1 January 2020 to 31

December 2020;

(h) 10% during the period from 1 January 2021 to 31

December 2021.

€0.36