Document ID: chunk:federal_register_of_legislation:F2024L01124:body:0:p21
Version: federal_register_of_legislation:F2024L01124
Segment Type: other
Provision Reference: 
Character Range: 57754–60629

Tier 1 Capital and 1.2.3 Additional Tier 1 Capital and 1.3 Excess Mutual Equity Interests.

2. Tier 2 Capital

2.1 Tier 2 Capital before regulatory adjustments

Column 1  Report the value.

Item 2.1.1    Report Tier 2 Capital instruments.
              This is as defined in APS 111.
Item 2.1.2    Report Tier 2 Capital instruments issued by fully consolidated subsidiaries in the Level 2 group held by third parties (Level 2 only).
              This is as defined in APS 111.
Item 2.1.3    Provisions eligible for inclusion in Tier 2 capital.
              The Provisions eligible for inclusion in Tier 2 capital may be included in Tier 2 Capital gross of tax effects, subject to the limits below.
Item 2.1.3.1  Report Standardised approach (to a maximum of 1.25% of total credit RWA).
              This is the value, as at the relevant date, of Provisions eligible for inclusion in Tier 2 capital (refer to APS 111) to be included in Tier 2 Capital and is limited to a maximum of 1.25 per cent of the total credit RWA of the ADI calculated under APS 112. This item is applicable to ADIs using the standardised approach to credit risk.
Item 2.1.3.2  Report IRB approach surplus provisions on non-defaulted exposures (to a maximum of 0.6% of credit RWA).

              This item is only applicable to ADIs using the IRB approach to credit risk. This is a derived field based on the amounts reported under Eligible provisions in Section D: Memorandum items of this form. For non-defaulted exposures, where there is a surplus of total eligible provisions over the total EL amount, the difference may be included as Tier 2 Capital, where:

                  * the surplus provisions are eligible to be treated as Provisions eligible for inclusion in Tier 2 capital (refer to APS 111); and

                  * the amount to be included as Tier 2 Capital is limited to a maximum of 0.6 per cent of the total credit RWA of the ADI.
                  * This is a derived field.
Item 2.2      Regulatory adjustments to Tier 2 Capital
Item 2.2.1    Report Capital investments in Tier 2 instruments of ADIs or overseas equivalents and their subsidiaries, insurance companies and other financial institutions.

              This is the value, as at the relevant date, of the reporting entity's direct, indirect and synthetic holdings of Tier 2 Capital instruments of other ADIs, or overseas equivalents and their subsidiaries, insurance companies and other financial institutions.

              For the purposes of this item, exclude:

                    *                 exposures acquired through underwriting of a new Tier 2 Capital instrument if the exposure is disposed of within five days of the date of issue. If the exposure is not disposed of within five days of issuance, it must be reported; or

                    *                 exposures that are held under