Own funds definition
The determination of own funds which may count towards eligible capital is set out mainly in Part 2 (Articles 25 to 91) of the Capital Requirements Regulation (CRR), which entered into force on 1 January 2014.
Pursuant to Article 72 in conjunction with Article 25 of the CRR, the own funds of an institution consist of the sum of its Common Equity Tier 1 capital (Articles 26 to 50 of the CRR), Additional Tier 1 capital (Articles 51 to 61 of the CRR) and Tier 2 capital (Articles 62 to 71 of the CRR). The CRR sets out the eligible components for each of these own funds classes, as well as the deductions to be made. Capital instruments may only be allocated to an own funds class if they meet the eligibility requirements of the relevant class. If even one single eligibility criterion is not or no longer satisfied, the relevant capital instrument immediately ceases to qualify for the relevant own funds class (Articles 30, 55 and 65 of the CRR).
More detailed provisions can be found in the Regulatory Technical Standards on Own Funds. Parts 1 and 2 of the four-part standard entered into force on 3 April 2014 as Delegated Regulation (EU) No 241/2014.