2020 Universal registration document and annual financial report - BNP PARIBAS 319
5risks and CaPital adequaCy Pillar 3
5
Capital management and capital adequacy
➤ TABLE 16: CHANGE IN ELIGIBLE DEBT
In millions of euros Tier 1 Tier 2
31 December 2019 8,967 17,100
New issues 1,609 2,973
Redemptions - (244)
Prudential discount - (608)
Others (350) (598)
31 December 2020 10,226 18,621
Transitional arrangements relating to regulatory capital
Under Regulation (EU) No. 575/2013 (CRR), the calculation methods introduced by Basel 3 can be implemented gradually until 1 January 2022. Since 2019, items still subject to these transitional arrangements are subordinated debt issued prior to 31 December 2011, eligible under prior regulations but not eligible under Basel 3, to which a declining eligibility threshold applies. The impact of these arrangements is set out in lines 80 to 85 of Appendix 2 Regulatory capital Detail. The amounts of these outstanding amounts that are ineligible in their category after 31 December 2021 are given on lines 33 and 35 respectively of Appendix 2 for additional Tier 1 equity instruments (EUR 1.7 billion at 31 December 2020 (for a total amount of EUR 1.7 billion at 31 December 2020 and EUR 1.2 billion euros on 2 March 2021), and on line 49 for the Tier 2 equity instruments (for EUR 29 million out of EUR 178 million at 31 December 2020 and EUR 0 million at 2 March 2021, the instrument having been called at par).
Regulation (EU) No. 2019/876 (CRR 2), which came into force on 27 June 2019, introduces additional eligibility criteria for Tier 1 and 2 regulatory capital which supplement those provided for by Regulation (EU) No. 575/2013. Instruments that were previously eligible under CRR, although not fulfilling these additional requirements may, eventually, be
recognised in a lower category, for a transitional period that may extend up to 2025. The Tier 2 balance not eligible under these additional criteria is EUR 149 million at 31 December 2020, of which EUR 118 million remain eligible until 2025.
The details of the instruments concerned by these transitional provisions, describing their eligibility period and the main characteristics in relation to the CRR/CRR2 Regulations and the EBA s opinion published on 21 October 2020, on the appropriate treatment of instruments ineligible at the end of 2021 in relation to the CRR criteria, are available on the Group s investor relations website: https://invest.bnpparibas.com/en/debts/tier-1-hybrids- subordinated-debt/capital-instruments-main-features-template.
Regulation (EU) No. 2017/2395 and Regulation (EU) No. 2020/873 define the transitional measures relating to the introduction of IFRS 9. These measures mitigate the impact of the increase in expected credit losses related to the application of new standard on CET1 capital until 2024. The Group has been applying these transitional measures since 31 March 2020 in accordance with the ECB recommendation. The Bank has opted for the arrangements relating to the calculation of the exposure value calculated under the Standardised Approach, defined in paragraph 4 and paragraph 7 point b) in the article 473a.
