Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p24
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 62216–65051

that are subsidiaries of the ADI, up to a maximum of 10 per cent of the ADI's Common Equity Tier 1 Capital for each exposure. Such exposures, after deduction of any intangibles component, must be risk-weighted at 250 per cent. For the avoidance of doubt, the amount of the equity exposure in excess of 10 per cent of the ADI's Common Equity Tier 1 Capital must be deducted from the ADI's Common Equity Tier 1 Capital. For the purpose of this deduction, Common Equity Tier 1 Capital is calculated after all other regulatory adjustments.
10.         For the purposes of this Attachment, equity exposures include:
(a)          equity exposures (as defined in paragraphs 34 to 38 of Attachment B to APS 112) and, in the case of an APRA-regulated institution or an overseas equivalent, holdings of debt instruments issued by the entity or other exposures that qualify as Regulatory Capital[20]; and
(b)          any portion of current year earnings or retained earnings that represents any amount derived from the ADI's share of undistributed profit or loss in an associate under equity accounting that is reflected in the value of equity investments in associates.
11.         For the purposes of this Attachment, other capital support includes, but is not limited to, any facility (other than equity exposures (refer to paragraph 10 of this Attachment)) recognised as a capital instrument, or otherwise accepted by regulators, financial markets and creditors as a capital instrument, or a TLAC instrument, or standing in place of capital. The amount of guarantees and other capital support is based on the maximum amount that the ADI could be required to pay under these arrangements.
12.         For the purposes of this Attachment, the amount of equity exposures and other capital support that must be deducted from the relevant category of Regulatory Capital is the book value of the equity exposure or other capital support, including any amount by which they have been revalued. Any intangibles component (such as goodwill) included in the valuation of equity exposures or other capital support must be deducted from Common Equity Tier 1 Capital. In the case of equity, or other capital support provided to a subsidiary, this would be calculated as the excess of the book value over the net tangible assets of the subsidiary.
13.         Where any equity exposures and other capital support in non-consolidated subsidiaries, including minority interests, have been incorporated for accounting purposes into the ADI's consolidated group accounts, the consolidation of these entities must, unless the value of such equity exposures and other capital support is otherwise required to be deducted from Common Equity Tier 1 Capital under this Prudential Standard, be reversed prior to the calculation of risk-based capital ratios at Level