This Decision lays down the conditions under which the ECB has determined to grant permission to credit institutions to include interim or year-end profits in CET1 capital pursuant to Article 26(2)(a) and (b) of Regulation (EU) No 575/2013.

This Decision is without prejudice to the right of credit institutions to request permission from the ECB to include interim or year-end profits in CET1 capital in cases not covered by this Decision.

This Decision applies to credit institutions for which the ECB carries out direct supervision in accordance with Regulation (EU) No 468/2014 of the European Central Bank (ECB/2014/17)

Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (ECB/2014/17) (OJ L 141, 14.5.2014, p. 1).

For the purposes of Article 26(2) of Regulation (EU) No 575/2013, credit institutions shall be permitted to include interim or year-end profits in CET1 capital before a formal decision confirming the final profit or loss of the institution for the year has been taken, provided that the credit institution has met the conditions set out in Articles 4 and 5 of this Decision.

The conditions set out in Articles 4 and 5 shall be met prior to submission of the applicable reporting on own funds and own funds requirements in accordance with the reporting remittance dates laid down in Article 3 of Implementing Regulation (EU) No 680/2014.

Credit institutions that intend to include interim or year-end profits in CET1 capital shall send a letter addressed to the ECB that includes the documentation required in Articles 4 and 5 of this Decision. Within three working days from receipt of the relevant documentation, the ECB shall notify credit institutions whether such documentation contains the information required in this Decision.

The ECB shall consider that the verification requirement under Article 26(2)(a) of Regulation (EU) No 575/2013 has been met if the notifying credit institution provides the ECB with a document signed by its external auditor that complies with the requirements set out in paragraphs 3 and 4.

Credit institutions notifying their intention to include interim or year-end profits as CET1 capital, at various levels of consolidation or on an individual basis, may provide the document referred to in paragraph 1 at the highest level of consolidation.

For year-end profits, the verification shall consist either of an audit report or of a comfort letter stating that the audit has not been completed and nothing has come to the attention of the auditors that causes them to believe that the final report will include a qualified opinion.

For interim profits, the verification shall consist either of an audit report or of a review report (as defined by the International Standard on Review Engagements 2410 issued by the International Auditing and Assurance Standards Board or a comparable standard applicable at national level) or, provided that the verification carried out by the credit institution consists of an audit report, a comfort letter along the lines set out in paragraph 3.

In those cases where interim or year-end profits are to be included on a consolidated or sub-consolidated basis, the requirements referred to in paragraph 1 shall be satisfied by the consolidating entity.

Any deduction of dividends based on an approach not listed in paragraph 3 shall not be covered by this Decision.

For the purposes of paragraph 1(b), a qualified person means a person who has been duly authorised by the institution's management body to sign on its behalf.

For the purposes of paragraph 1, institutions shall use the model letter in the Annex to this Decision.

This Decision shall enter into force on 6 February 2015.

This Decision shall apply from the reporting reference date of 31 December 2014 in accordance with Article 2 of Implementing Regulation (EU) No 680/2014.