2.

in Part Two, the following Section IIa is inserted: ‘IIa. Own funds requirements 1. Article 78(1)(b) of Regulation (EU) No 575/2013: reduction of own funds: excess capital margin requirement 1.1 An NCA should determine the excess margin required pursuant to Article 78(1)(b) of Regulation (EU) No 575/2013 for the purpose of a reduction of own funds, provided that the conditions of Article 78(1) are met and after assessing all of the following factors: (a) whether the credit institution taking any of the actions referred to in Article 77(1) of Regulation (EU) No 575/2013 would continue to exceed, over a three-year horizon, the overall capital requirements set out in the most recent applicable supervisory review and evaluation process (SREP) decision by at least the guidance on additional own funds set out in the same SREP decision; (b) whether the credit institution taking any of the actions referred to in Article 77(1) of Regulation (EU) No 575/2013 would continue to exceed, over a three-year horizon, the requirements laid down in Directive 2014/59/EU by at least the margin which the National Resolution Authority or the Single Resolution Board, in agreement with the NCA, would consider necessary to fulfil the condition set out in Article 78a of Regulation (EU) No 575/2013; (c) the impact of the planned reduction on the relevant tier of own funds; (d) whether the credit institution taking any of the actions referred to in Article 77(1) of Regulation (EU) No 575/2013 would continue to exceed, over a three-year horizon, the leverage ratio requirement laid down in Article 92(1)(d) of that Regulation, and the additional own funds requirement to address the risk of excessive leverage set out in the most recent applicable SREP decision, by at least the guidance on additional own funds to address the risk of excessive leverage set out in that SREP decision. 1.2 Applications to reduce own funds received from credit institutions that do not adhere to the margins set out above should still be approved on a case-by-case basis where they are duly justified by well-founded prudential arguments. Where the margin under point (b) of paragraph 1.1 is not adhered to, the NCA should seek the opinion of the National Resolution Authority or the Single Resolution Board on whether the own funds reduction may jeopardise the fulfilment of the requirements for own funds and eligible liabilities laid down in Directive 2014/59/EU. 1.3 Where for the purposes of point (a) or (d) of paragraph 1.1 the credit institution is not subject to guidance on additional own funds, the margin must be determined on a case-by-case basis, having regard to the specific circumstances of the credit institution. 2. Second subparagraph of Article 78(1) of Regulation (EU) No 575/2013: reduction of own funds: general prior permission An NCA should grant the general prior permission provided for in the second subparagraph of Article 78(1) of Regulation (EU) No 575/2013 where the conditions set out therein and in Commission Delegated Regulation (EU) No 241/2014 (*3) are met. An NCA should determine the margin specified in the second subparagraph of Article 78(1) of Regulation (EU) No 575/2013, after assessing all of the factors set out in paragraph 1 of Section IIa of this Recommendation. 3. In Part Two, Section V is deleted; 4. The Annex is replaced by the Annex to this Recommendation.