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CEIOPS and CEBS published a Comparison of the capital instruments that are eligible for prudential purposes in the application of the European banking, insurance and securities regulation.
On the basis of current sectoral Directives, the report analysed the main similarities and differences of the characteristics of regulatory capital for a credit institution, an investment firm and an insurance entity. The methods of calculating capital for regulatory purposes are also addressed, with a special focus on the impact of the new International Accounting Standards IAS/IFRS and on the prudential filters.
Most eligible capital instruments - although ‘labelled’ differently -are common in the two sectors and share the same core characteristics. The differences that emerged from the analysis can be explained by the differences in the nature of business of each sector, or by differences in the calculation of eligible capital elements and the way they are taken into account at group level. In the next few months, the impact that differences in the sectoral rules might have for the supervision of financial conglomerates will be analysed.