Einde inhoudsopgave
State aid to banks (IVOR nr. 109) 2018/3.3.3
3.3.3 Recapitalisation
mr. drs. R.E. van Lambalgen, datum 01-12-2017
- Datum
01-12-2017
- Auteur
mr. drs. R.E. van Lambalgen
- JCDI
JCDI:ADS585852:1
- Vakgebied(en)
Financieel recht / Europees financieel recht
Mededingingsrecht / EU-mededingingsrecht
Voetnoten
Voetnoten
Before the introduction of CRD IV, there was also a category know as Tier 3 capital. This category was repealed by CRD IV. Tier 1 capital consists of Common Equity Tier 1 capital (CET) and Additional Tier 1 capital (AT). The CRR sets out in detail the criteria that capital instruments have to meet in order to qualify as CET, as AT and as Tier 2. These criteria are laid down in Art. 26 to 50, 51 to 61 and 62 to 71 CRR respectively.
Joosen 2010a, p. 186, footnote 27.
A capital injection can be performed ad hoc or in the context of a scheme.
Capital is important, because it is a ‘cushion’ or ‘buffer’ that can be used to absorb losses. Capital requirements ensure that banks have enough loss-absorbing capacity. A higher capital buffer would increase the “distance to default”. Regulatory capital not only includes equity, but also hybrid securities. A distinction can be made between Tier 1 capital and Tier 2 capital.1 Tier 1 capital is “going concern” capital, while Tier 2 capital is “gone concern” capital. These terms refer to the fact that Tier 1 capital is used to absorb losses in a going concern situation, whereas Tier 2 capital is intended to be used in a situation in which the bank is liquidated.2
A recapitalisation means that the State injects capital into the bank.3 This capital injection can be in the form of ordinary shares, preference shares or some hybrid capital instruments. A capital injection ensures that the beneficiary bank is in compliance with regulatory capital requirements.