Germany's Federal Financial Supervisory Authority (BaFin) issued a general administrative order for cooperative credit institutions not directly supervised by the European Central Bank that grants permission to classify newly issued and paid-in member shares as Common Equity Tier 1 (CET1) and to repay member capital arising from terminated shares under a standardised, pre-approved approach. CET1 recognition applies to newly issued and paid-in shares under the institution’s statutes, provided the shares meet the requirements in Articles 28 and 29 of the Capital Requirements Regulation (CRR), in particular Article 29(2)(a). Repayments of member capital linked to terminations since 1 January 2014 are permitted where a specified ratio does not exceed 0.5%: the amount of outstanding repayment obligations at end-2024 net of new paid-in shares issued in 2024 is measured against end-2024 CET1 plus those outstanding obligations. Institutions must also remain compliant after repayment with CRR minimum own funds and leverage requirements and with existing additional own funds requirements and capital guidance under the German Banking Act, while maintaining additional safety buffers of 0.75 percentage points (risk-based) and 0.25 percentage points (leverage). Where the 0.5% threshold is exceeded, a permission application is required only for the repayment amounts that cause the exceedance. The permissions are subject to a reporting condition: with the current quarterly own funds report, institutions must submit to BaFin and the Deutsche Bundesbank a schedule of member shares newly issued and paid-in during the last financial year and shares terminated but not yet repaid, normally at least two months before approval of the annual financial statements. The order applies until 31 December 2025 and is subject to revocation, including on an institution-specific basis.
BaFin 2025-01-01
Germany's Federal Financial Supervisory Authority grants LSI cooperative banks CET1 recognition for new member shares and pre-approves repayments up to 0.5%
Germany's BaFin allows cooperative credit institutions not directly supervised by the ECB to classify new member shares as CET1 and repay member capital from terminated shares under a standardised approach. CET1 recognition requires compliance with Articles 28 and 29 of the Capital Requirements Regulation, with repayments limited by a 0.5% threshold relative to end-2024 CET1. Institutions must report newly issued and terminated shares to BaFin and the Deutsche Bundesbank, with the order effective until 31 December 2025.