Article 31 Capital instruments subscribed by public authorities in emergency situations

In emergency situations, competent authorities may permit institutions to include in Common Equity Tier 1 capital instruments that comply at least with the conditions laid down in points (b) to (e) of Article 28(1) where all the following conditions are met:

the capital instruments are issued after 1 January 2014;

the capital instruments are considered State aid by the Commission;

the capital instruments are issued within the context of recapitalisation measures pursuant to State aid- rules existing at the time;

the capital instruments are fully subscribed and held by the State or a relevant public authority or public-owned entity;

the capital instruments are able to absorb losses;

except for the capital instruments referred to in Article 27, in the event of liquidation, the capital instruments entitle their owners to a claim on the residual assets of the institution after the payment of all senior claims;

there are adequate exit mechanisms of the State or, where applicable, a relevant public authority or public-owned entity;

the competent authority has granted its prior permission and has published its decision together with an explanation of that decision.

Upon reasoned request by, and in cooperation with, the relevant competent authority, EBA shall consider the capital instruments referred to in paragraph 1 as equivalent to Common Equity Tier 1 instruments for the purposes of this Regulation.