Reset to Today

To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004.

Content Options:

Add to favourites

View Options:

More Resources:

External link Handbook Publications

Alternative versions

  1. Point in time
    2024-12-18

Article 7a Multiple distributions constituting a disproportionate drag on own funds

  1. (1)

    Distributions on Common Equity Tier 1 instruments referred to in Article 28 of Regulation (EU) No 575/2013 shall be deemed not to constitute a disproportionate drag on capital where all of the following conditions are met:

    1. (a)

      the dividend multiple is a multiple of the distribution paid on the voting instruments and not a predetermined fixed amount;

    2. (b)

      the dividend multiple is set contractually or under the statutes of the institution;

    3. (c)

      the dividend multiple is not revisable;

    4. (d)

      the same dividend multiple applies to all instruments with a dividend multiple;

    5. (e)

      the amount of the distribution on one instrument with a dividend multiple does not represent more than 125 % of the amount of the distribution on one voting Common Equity Tier 1 instrument.

      In formulaic form this shall be expressed as:

      CRD_2014_241_Artilce_7a_point_1e_formula

      where:

      1. k shall represent the amount of the distribution on one instrument without a dividend multiple;

      2. l shall represent the amount of the distribution on one instrument with a dividend multiple;

    6. (f)

      the total amount of the distributions paid on all Common Equity Tier 1 instruments during a one year period does not exceed 105 % of the amount that would have been paid if instruments with fewer or no voting rights received the same distributions as voting instruments.

      In formulaic form this shall be expressed as:

      CRD_2014_241_Artilce_7a_point_1f_formula

      where:

      1. k shall represent the amount of the distribution on one instrument without a dividend multiple;

      2. l shall represent the amount of the distribution on one instrument with a dividend multiple;

      3. X shall represent the number of voting instruments;

      4. Y shall represent the number of non-voting instruments.

      The formula shall be applied on a one-year basis.

  2. (2)

    Where the condition of point (f) of paragraph 1 is not met, only the amount of the instruments with a dividend multiple that exceeds the threshold defined therein shall be deemed to cause a disproportionate drag on capital.

  3. (3)

    Where any of the conditions of points (a) to (e) of paragraph 1 are not met, all outstanding instruments with a dividend multiple shall be deemed to cause a disproportionate drag on capital.