Procedure For Calculation Of Maximum Distributable Amount Of Equity

Link to law: https://www.riigiteataja.ee/en/eli/ee/EPP/reg/506012015003/consolide
Published: 2015-01-09

Procedure for calculation of maximum distributable amount of equity

Passed 09.07.2014 Annex 13

This decree is based on subsection 8650 (8) of the Credit Institutions Act.

§ 1.  Scope of application of decree

This decree establishes the procedure for the calculation of the maximum amount of equity that can be distributed by a credit institution.

§ 2.  Application of decree

The decree applies to all credit institutions that have been granted an authorisation in Estonia on a non-consolidated and consolidated basis.

§ 3.  Maximum distributable equity amount

(1) To calculate the maximum distributable equity amount, the credit institution multiplies an amount determined in accordance with subsection (3) by a factor determined in accordance with subsection (4).
(2) If the credit institution has made payouts specified in subsection 8650 (2) of the Credit Institutions Act after it has become evident that the combined capital buffer requirement has not been fulfilled and before the submission of the maximum distributable equity amount to the Estonian Financial Supervision Authority, the maximum distributable equity amount will be reduced by these payouts.
(3) The equity amount that is to be multiplied by a factor found in accordance with the procedure specified in subsection (1) and determined in subsection (4) includes the amounts specified in clauses 1) and 2) of this subsection less the related taxes that must be paid when equity amounts are not paid and they remain at the disposal of the credit institution:
1) interim profit that, in accordance with Article 26(2) of the Regulation (EU) No 575/2013 of the European Parliament and of the Council (hereinafter Banking Regulation), is not included in Common Equity Tier 1 and that is earned after the last profit distribution proposal or after the making or deciding of the payouts specified in subsection 8650 (2) of the Credit Institution Act;
2) year-end profit that, in accordance with Article 26(2) of the Banking Regulation, is not included in Common Equity Tier 1 and that is earned after the last profit distribution proposal or after the making or deciding of the payouts specified in subsection 8650 (2) of the Credit Institution Act.
(4) The factor specified in subsection (1) is determined as follows:
1) the factor is 0 if the Common Equity Tier 1 retained by the credit institution, which is not used for fulfilling the own funds requirement set out in Article 92(1)(c) of the Banking Regulation that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the first (i.e. the lowest) quartile of the combined buffer requirement;
2) the factor is 0.2 if the Common Equity Tier 1 retained by the credit institution, which is not used for fulfilling the own funds requirement set out in Article 92(1)(c) of the Banking Regulation that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the second quartile of the combined buffer requirement;
3) the factor is 0.4 if the Common Equity Tier 1 retained by the credit institution, which is not used for fulfilling the own funds requirement set out in Article 92(1)(c) of the Banking Regulation that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the third quartile of the combined buffer requirement;
4) the factor is 0.6 if the Common Equity Tier 1 retained by the credit institution, which is not used for fulfilling the own funds requirement set out in Article 92(1)(c) of the Banking Regulation that is calculated as a percentage of the total risk exposure in accordance with Article 92(3) of the Banking Regulation, remains in the fourth (i.e. the highest) quartile of the combined buffer requirement.
(5) The lower and upper bounds of each quartile is calculated as follows:

Qn – the ordinal number of the quartile concerned.
Ülo Kaasik
Deputy Governorin the capacity of the Governor
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