BANK 3.2.37 Non-significant investments — aggregate is less than 10% of firm's common equity tier 1 capital
(1) This rule applies if:
(a) a banking business firm makes a non-significant investment in an entity concerned;
(b) the entity concerned is an unconsolidated entity (that is, the entity is not one that is included in the firm's consolidated returns);
(c) the firm does not own 10% or more of the common shares of the entity concerned; and
(d) after applying all other regulatory adjustments, the total of the deductions required to be made under this rule is less than 10% of the firm's CET 1 capital.
(2) A banking business firm must deduct any investments in common shares, or other instruments that qualify as capital, of an entity concerned.
(3) The amount to be deducted is the net long position (that is, the gross long position net of short positions in the same underlying exposure if the maturity of the short position either matches the maturity of the long position or has a residual maturity of at least 1 year).
(4) Underwriting positions held for more than 5 business days must also be deducted.
(5) If a capital instrument is required to be deducted and it is not possible to determine whether it should be deducted from CET 1 capital, additional tier 1 capital or tier 2 capital, the deduction must be made from CET 1 capital.
|Amended by QFCRA RM/2015-3 (as from 1st January 2016).|