• PRU 3.13 PRU 3.13 Minority interests and instruments issued by Subsidiaries

    • CET1 deductions relating to significant investment in a Relevant Entity

      • Deductions relating to CET1 Capital instruments in Relevant Entities

        • CET1 deductions relating to intangible assets

          • CET1 exemptions from deductions

            • CET1 deductions relating to deferred tax assets

              • Deductions relating to defined benefit pension fund assets

                • Deductions relating to holdings of own CET1 Capital instruments

                • Minority interests that qualify for inclusion in consolidated CET1 Capital

                • PRU 3.13.1

                  Minority interests must include the CET1 Capital instruments, plus the related retained earnings and Share premium accounts of a Subsidiary, only where all of the following conditions are met:

                  (a) the Subsidiary is one of the following:
                  (i) an Authorised Person; or
                  (ii) a regulated entity;
                  (b) the Subsidiary is a member of the Financial Group and included in the scope of consolidated supervision in accordance with Chapter 8; and
                  (c) those CET1 Capital instruments are owned by Persons other than the Undertakings included in the Financial Group.

                • PRU 3.13.2

                  Minority interests that are funded, directly or indirectly, through a Special Purpose Entity (SPE) or otherwise, by the Parent of the Authorised Person or any member of its Financial Group must not qualify for inclusion in the consolidated CET1 Capital of the Financial Group.

                • PRU 3.13.3

                  An Authorised Person must determine the amount of minority interests of a Subsidiary that is eligible for inclusion in its consolidated CET1 Capital by subtracting from the minority interests of that Subsidiary the result of multiplying the amount referred to in (a) by the percentage referred to in (b):

                  (a) the CET1 Capital of the Subsidiary minus the lesser of the following:
                  (i) the amount of CET1 Capital of that Subsidiary required to meet the sum of the Subsidiary's CET1 Capital requirement (on a solo basis) of 6.0% of its Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7, and its Combined Buffer Requirement; or
                  (ii) the amount of consolidated CET1 Capital that relates to that Subsidiary that is required on a consolidated basis to meet the sum of its Financial Group's CET1 Capital requirement of 6.0% of its Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7, and its Combined Buffer Requirement;
                  (b) the minority interests of the Subsidiary expressed as a percentage of all CET1 Capital instruments of that Undertaking plus the related retained earnings and Share premium accounts.

                • Qualifying AT1, T1, T2 Capital and qualifying Capital Resources

                • PRU 3.13.4

                  Qualifying AT1, T1, T2 Capital and qualifying Capital Resources must include the minority interest, AT1, T1 or T2 Capital instruments, as applicable, plus the related retained earnings and Share premium accounts of a Subsidiary only where the following conditions are met:

                  (a) the Subsidiary is one of the following:
                  (i) an Authorised Person; or
                  (ii) a regulated entity;
                  (b) the Subsidiary is a member of the Financial Group and included in the scope of consolidated supervision in accordance with Chapter 8; and
                  (c) those instruments are owned by Persons other than the Undertakings included in the Financial Group.

                • Qualifying AT1 and T2 Capital issued by a Special Purpose Entity

                  • Qualifying Capital Resources instruments included in consolidated T2 Capital

                    • PRU 3.13.9 PRU 3.13.9

                      An Authorised Person must determine the amount of qualifying Capital Resources of a Subsidiary that is included in consolidated T2 Capital by subtracting from the qualifying Capital Resources of that Subsidiary that are included in consolidated Capital Resources, the qualifying T1 Capital of that Subsidiary that is included in consolidated T1 Capital of the Financial Group of the Authorised Person.

                      • PRU 3.13.5 PRU 3.13.5

                        AT1 and T2 Capital instruments issued by an SPE, and the related retained earnings and Share premium accounts, may be included in qualifying AT1 or T2 Capital or qualifying Capital Resources, as applicable, only where the following conditions are met:

                        (a) the SPE issuing those instruments is included fully in the Financial Group to which the Authorised Person belongs;
                        (b) the instruments, and the related retained earnings and Share premium accounts, are included in qualifying AT1 Capital only where the conditions laid down in Rule 3.11.3(1) are satisfied;
                        (c) the instruments, and the related retained earnings and Share premium accounts, are included in qualifying T2 Capital only where the conditions laid down in Rule 3.12.3(1) are satisfied; and
                        (d) the only asset of the SPE is its investment in the Capital Resources of any of its Parents or their Subsidiaries, which are included fully in the Financial Group to which the Authorised Person belongs, the form of which satisfies the relevant conditions laid down in Rule 3.11.3(1) or Rule 3.12.3(1), as applicable.

                        • Guidance

                          If the Regulator considers the assets of an SPE to be minimal and insignificant for such an entity, the Regulator may consider waiving the condition specified in Rule 3.13.5(d).

                      • PRU 3.13.6

                        An Authorised Person must determine the amount of qualifying T1 Capital of a Subsidiary that is included in consolidated T1 Capital of the Authorised Person's Financial Group by subtracting from the qualifying T1 Capital of that Subsidiary the result of multiplying the amount referred to in (a) by the percentage referred to in (b):

                        (a) the lesser of the following:
                        (i) the amount of T1 Capital of that Subsidiary required to meet the sum of the Subsidiary's T1 Capital requirement (on a solo basis) of 8.0% of its Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7, and its Combined Buffer Requirement; or
                        (ii) the amount of consolidated T1 Capital that relates to the Subsidiary that is required on a consolidated basis to meet the sum of its Financial Group's T1 Capital requirement of 8.0% of the Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7, and its Combined Buffer Requirement;
                        (b) the qualifying T1 Capital of the Subsidiary expressed as a percentage of all T1 Capital instruments of that Subsidiary plus the related retained earnings and Share premium accounts.

                  • Qualifying T1 Capital instruments included in consolidated T1 Capital

                    • PRU 3.13.7

                      An Authorised Person must determine the amount of qualifying T1 Capital of a Subsidiary that is included in consolidated AT1 Capital by subtracting from the qualifying T1 Capital of that Subsidiary included in consolidated T1 Capital, the minority interests of that Subsidiary that are included in consolidated CET1 Capital.

                  • Qualifying T1 Capital included in consolidated AT1 Capital

                  • Qualifying Capital Resources included in consolidated Capital Resources

                    • PRU 3.13.8

                      An Authorised Person must determine the amount of qualifying Capital Resources of a Subsidiary that is included in consolidated Capital Resources of its Financial Group by subtracting from the qualifying Capital Resources of that Subsidiary, the result of multiplying the amount referred to in (a) by the percentage referred to in (b):

                      (a) the lesser of the following:
                      (i) the amount of Capital Resources of the Subsidiary required to meet the sum of the Subsidiary's total Capital Requirement (on a solo basis) of 10.0% of its Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7 and its Combined Buffer Requirement; or
                      (ii) the amount of Capital Resources that relates to the Subsidiary that is required on a consolidated basis to meet the sum of its Financial Group's total Capital Requirement of 10.0% of its Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7, and its Combined Buffer Requirement;
                      (b) the qualifying Capital Resources of the Subsidiary, expressed as a percentage of all Capital Resources instruments of the Subsidiary that are included in its CET1, AT1 and T2 Capital items and the related retained earnings and Share premium accounts.