Danish Financial Supervisory Authority introduces simplified process for general pre-approvals to buy back up to 0.5% of Common Equity Tier 1 instruments

The Danish Financial Supervisory Authority has introduced a simplified application process for credit institutions seeking a general prior authorisation to buy back their own Common Equity Tier 1 (CET1) instruments, with the framework authorisation capped at an amount equal to 0.5% of CET1. The change is presented as part of its work on a national proportionality regime to reduce administrative burdens where EU rules allow. The streamlined route reduces the information requirements compared with other applications to redeem or buy back own capital instruments and removes the need to submit a stress test. It is aimed primarily at small and medium-sized banks but can be used by any credit institution that meets the conditions, including at least 5% overcoverage to capital, NEP and debt buffer requirements relative to risk-weighted exposures, a Liquidity Coverage Ratio of at least 150%, and a leverage ratio of at least 7%. The general prior authorisation can be used for purposes such as market making or employee remuneration, and banks and savings banks converted into limited liability companies must also observe the CRR limits for general prior authorisations of 3% of the specific issuance and 10% of the overcoverage to capital and NEP requirements.