AI Summary of Article 428j Residual maturity of a liability or of own funds
This Chapter outlines that institutions must consider the residual contractual maturity of their liabilities and own funds when applying available stable funding factors. Notably, existing options must be accounted for in assessing the residual maturity, with an expectation that counterparties will exercise call options promptly. Institutions should also recognise reputational pressures that may influence their decisions regarding the redemption of certain liabilities.
The treatment of deposits is clarified, differentiating between fixed notice period deposits and term deposits based on residual maturity. Notably, early withdrawal penalties, as stipulated in the relevant delegated act, are excluded from considerations for term retail deposits where penalties apply before a year.
Article 428j Residual maturity of a liability or of own funds
1. Unless otherwise specified in this Chapter, institutions shall take into account the residual contractual maturity of their liabilities and own funds to determine the available stable funding factors to be applied under Section 2.
2. Institutions shall take into account existing options in determining the residual maturity of a liability or of own funds. They shall do so on the assumption that the counterparty will redeem call options at the earliest possible date. For options exercisable at the discretion of the institution, the institution and the competent authorities shall take into account reputational factors that may limit an institution's ability not to exercise the option, in particular market expectations that institutions should redeem certain liabilities before their maturity.