4
Preference
4.1
Where possible, the PRA expects firms to meet their CET1 requirements entirely with voting common shares and associated reserves. The PRA strongly discourages firms from including non-voting shares in CET1, particularly if such shares have higher dividends than common shares. The main reason for the PRA’s concern is that it is imperative that the composition of a firm’s CET1 is as straightforward and transparent as possible. There should also be no doubt that a firm’s CET1 only includes the highest quality capital. The inclusion of instruments other than voting common shares in CET1 could lead to concerns that such instruments may not have the same capital quality.
- 01/01/2023