BANK 3.2.19 Treatment of third party interests from special purpose vehicles

(1) An instrument issued out of a special purpose vehicle and held by a third party must not be included in a banking business firm's CET 1 capital. Such an instrument may be included in the firm's additional tier 1 or tier 2 capital (and treated as if it had been issued by the firm itself directly to the third party), if:
(a) the instrument satisfies the criteria for inclusion in the relevant category of regulatory capital; and
(b) the only asset of the special purpose vehicle is its investment in the capital of the firm and that investment satisfies the criterion in rule 3.2.11(16) or 3.2.13(11) for the immediate availability of the proceeds.
(2) An instrument described in subrule (1) that is issued out of a special purpose vehicle through a consolidated subsidiary of a banking business firm may be included in the firm's consolidated additional tier 1 or tier 2 capital if the instrument satisfies the criteria in rule 3.2.17 or 3.2.18, as the case requires. Such an instrument is treated as if it had been issued by the subsidiary itself directly to the third party.
Derived from QFCRA RM/2014-2 (as from 1st January 2015).