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CEBS published an empirical snapshot of the characteristics of hybrid capital instruments recognised as regulatory original own funds in the European Economic Area. It is the third contribution to the Commission's current review of the definition of Own Funds.
Hybrids refer to a wide range of capital instruments that combine features of debt and equity but are neither common stock nor ordinary debt. CEBS has analysed the year end 2006 data from a representative sample of institutions in the EEA countries where such instruments are eligible as original own funds.
CEBS concludes that the vast majority of hybrids are undated. Institutions have maximum discretion over the amount and timing of distributions and payments which in most cases can be waived to absorb losses on a going concern basis and in periods of stress.
The final analysis is expected to be finalised by mid 2007.