(16)

Article 28 is amended as follows: paragraph 1 is amended as follows: point (b) is replaced by the following: the instruments are fully paid up and the acquisition of ownership of those instruments is not funded directly or indirectly by the institution;’; the following subparagraph is added: ‘For the purposes of point (b) of the first subparagraph, only the part of a capital instrument that is fully paid up shall be eligible to qualify as a Common Equity Tier 1 instrument.’; in paragraph 3, the following subparagraphs are added: ‘The condition set out in point (h)(v) of the first subparagraph of paragraph 1 shall be considered to be met notwithstanding a subsidiary being subject to a profit and loss transfer agreement with its parent undertaking, according to which the subsidiary is obliged to transfer, following the preparation of its annual financial statements, its annual result to the parent undertaking, where all the following conditions are met: Where an institution has entered into a profit and loss transfer agreement, it shall notify the competent authority without delay and provide the competent authority with a copy of the agreement. The institution shall also notify the competent authority without delay of any changes to the profit and loss transfer agreement and the termination thereof. An institution shall not enter into more than one profit and loss transfer agreement.’; the parent undertaking owns 90 % or more of the voting rights and capital of the subsidiary; the parent undertaking and the subsidiary are located in the same Member State; the agreement was concluded for legitimate taxation purposes; in preparing the annual financial statement, the subsidiary has discretion to decrease the amount of distributions by allocating a part or all of its profits to its own reserves or funds for general banking risk before making any payment to its parent undertaking; the parent undertaking is obliged under the agreement to fully compensate the subsidiary for all losses of the subsidiary; the agreement is subject to a notice period according to which the agreement can be terminated only by the end of an accounting year, with such termination taking effect no earlier than the beginning of the following accounting year, leaving the parent undertaking's obligation to fully compensate the subsidiary for all losses incurred during the current accounting year unchanged.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-12 · Text as adopted (Official Journal); later amendments are not incorporated in this text.