+Sub-Section 1 Deductions from Common Equity Tier 1 items
---+Article 36 Deductions from Common Equity Tier 1 items
------+Article 36 1.
------+Article 36 2.
------+Article 36 3.
------+Article 36 4.
------+Article 36 5.
---+Article 37 Deduction of intangible assets
---+Article 38 Deduction of deferred tax assets that rely on future profitability
------+Article 38 1.
------+Article 38 2.
------+Article 38 3.
------+Article 38 4.
------+Article 38 5.
---+Article 39 Tax overpayments, tax loss carry backs and deferred tax assets that do not rely on future profitability
------+Article 39 1.
------+Article 39 2.
---+Article 40 Deduction of negative amounts resulting from the calculation of expected loss amounts
---+Article 41 Deduction of defined benefit pension fund assets
------+Article 41 1.
------+Article 41 2.
---+Article 42 Deduction of holdings of own Common Equity Tier 1 instruments
---+Article 43 Significant investment in a financial sector entity
---+Article 44 Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds
---+Article 45 Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities
---+Article 46 Deduction of holdings of Common Equity Tier 1 instruments where an institution does not have a significant investment in a financial sector entity
------+Article 46 1.
------+Article 46 2.
------+Article 46 3.
------+Article 46 4.
------+Article 46 5.
---+Article 47 Deduction of holdings of Common Equity Tier 1 instruments where an institution has a significant investment in a financial sector entity
---+Article 47a Non-performing exposures
------+Article 47a 1.
------+Article 47a 2.
------+Article 47a 3.
------+Article 47a 4.
------+Article 47a 5.
------+Article 47a 6.
------+Article 47a 7.
---+Article 47b Forbearance measures
------+Article 47b 1.
------+Article 47b 2.
------+Article 47b 3.
------+Article 47b 4.
---+Article 47c Deduction for non-performing exposures
------+Article 47c 1.
------+Article 47c 2.
------+Article 47c 3.
------+Article 47c 4.
------+Article 47c 4a.
------+Article 47c 5.
------+Article 47c 6.

Sub-Section 1 Deductions from Common Equity Tier 1 items

Sub-Section 1 Deductions from Common Equity Tier 1 items

1. Overview

,
Article 36 Deductions from Common Equity Tier 1 items
Article 37 Deduction of intangible assets

Article 37

Deduction of intangible assets

Institutions shall determine the amount of intangible assets to be deducted in accordance with the following:

(a) 

the amount to be deducted shall be reduced by the amount of associated deferred tax liabilities that would be extinguished if the intangible assets became impaired or were derecognised under the applicable accounting framework;

(b) 

the amount to be deducted shall include goodwill included in the valuation of significant investments of the institution;

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(c) 

the amount to be deducted shall be reduced by the amount of the accounting revaluation of the subsidiaries' intangible assets derived from the consolidation of subsidiaries attributable to persons other than the undertakings included in the consolidation pursuant to Chapter 2 of Title II of Part One.

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Article 38 Deduction of deferred tax assets that rely on future profitability
Article 39 Tax overpayments, tax loss carry backs and deferred tax assets that do not rely on future profitability
Article 40 Deduction of negative amounts resulting from the calculation of expected loss amounts

Article 40

Deduction of negative amounts resulting from the calculation of expected loss amounts

The amount to be deducted in accordance with point (d) of Article 36(1) shall not be reduced by a rise in the level of deferred tax assets that rely on future profitability, or other additional tax effects, that could occur if provisions were to rise to the level of expected losses referred to in Section 3 of Chapter 3 of Title II of Part Three.
Article 41 Deduction of defined benefit pension fund assets
Article 42 Deduction of holdings of own Common Equity Tier 1 instruments

Article 42

Deduction of holdings of own Common Equity Tier 1 instruments

For the purposes of point (f) of Article 36(1), institutions shall calculate holdings of own Common Equity Tier 1 instruments on the basis of gross long positions subject to the following exceptions:

(a) 

institutions may calculate the amount of holdings of own Common Equity Tier 1 instruments on the basis of the net long position provided that both the following conditions are met:

(i) 

the long and short positions are in the same underlying exposure and the short positions involve no counterparty risk;

(ii) 

either both the long and the short positions are held in the trading book or both are held in the non-trading book;

(b) 

institutions shall determine the amount to be deducted for direct, indirect and synthetic holdings of index securities by calculating the underlying exposure to own Common Equity Tier 1 instruments included in those indices;

(c) 

institutions may net gross long positions in own Common Equity Tier 1 instruments resulting from holdings of index securities against short positions in own Common Equity Tier 1 instruments resulting from short positions in the underlying indices, including where those short positions involve counterparty risk, provided that both the following conditions are met:

(i) 

the long and short positions are in the same underlying indices;

(ii) 

either both the long and the short positions are held in the trading book or both are held in the non-trading book.
Article 43 Significant investment in a financial sector entity

Article 43

Significant investment in a financial sector entity

For the purposes of deduction, a significant investment of an institution in a financial sector entity shall arise where any of the following conditions is met:

(a) 

the institution owns more than 10 % of the Common Equity Tier 1 instruments issued by that entity;

(b) 

the institution has close links with that entity and owns Common Equity Tier 1 instruments issued by that entity;

(c) 

the institution owns Common Equity Tier 1 instruments issued by that entity and the entity is not included in consolidation pursuant to Chapter 2 of Title II of Part One but is included in the same accounting consolidation as the institution for the purposes of financial reporting under the applicable accounting framework.
Article 44 Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds

Article 44

Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds

Institutions shall make the deductions referred to in points (g), (h) and (i) of Article 36(1) in accordance with the following:

(a) 

holdings of Common Equity Tier 1 instruments and other capital instruments of financial sector entities shall be calculated on the basis of the gross long positions;

(b) 

Tier 1 own-fund insurance items shall be treated as holdings of Common Equity Tier 1 instruments for the purposes of deduction.
Article 45 Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities

Article 45

Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities

Institutions shall make the deductions required by points (h) and (i) of Article 36(1) in accordance with the following provisions:

(a) 

they may calculate direct, indirect and synthetic holdings of Common Equity Tier 1 instruments of the financial sector entities on the basis of the net long position in the same underlying exposure provided that both the following conditions are met:

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(i) 

the maturity date of the short position is either the same as, or later than the maturity date of the long position or the residual maturity of the short position is at least one year;

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(ii) 

either both the long position and the short position are held in the trading book or both are held in the non-trading book;

(b) 

they shall determine the amount to be deducted for direct, indirect and synthetic holdings of index securities by calculating the underlying exposure to the capital instruments of the financial sector entities in those indices.
Article 46 Deduction of holdings of Common Equity Tier 1 instruments where an institution does not have a significant investment in a financial sector entity
Article 47 Deduction of holdings of Common Equity Tier 1 instruments where an institution has a significant investment in a financial sector entity

Article 47

Deduction of holdings of Common Equity Tier 1 instruments where an institution has a significant investment in a financial sector entity

For the purposes of point (i) of Article 36(1), the applicable amount to be deducted from Common Equity Tier 1 items shall exclude underwriting positions held for five working days or fewer and shall be determined in accordance with Articles 44 and 45 and Sub-section 2.
Article 47a Non-performing exposures
Article 47b Forbearance measures
Article 47c Deduction for non-performing exposures

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

Requirements

3. Related Standards

Standards