This regulation outlines the conditions under which financial institutions may obtain permission from the competent authority to reduce, redeem, or repurchase their Common Equity Tier 1, Additional Tier 1, or Tier 2 instruments. Such permissions can be granted if the institution replaces these instruments with ones of equal or higher quality or demonstrates sufficient own funds exceeding regulatory requirements. General prior permission may also be provided for a specified period, not exceeding one year, subject to certain limitations.

Additionally, institutions can redeem instruments under specific circumstances, such as changes in regulatory classification or tax treatment, provided they met the relevant criteria. The European Banking Authority is tasked with developing regulatory technical standards to clarify the processes and limits associated with these actions.