(13) Exemption or exclusion from consolidation
| (a) | A bank or controlling company may in writing apply to the Registrar to exclude from consolidation in terms of the requirements specified in this regulation 36 certain financial entities or interests, financial activities or non-financial entities held within the relevant banking group, provided that the bank or controlling company, as the case may be, shall in its application to the Registrar provide detailed motivation to exclude from consolidation the said financial entity or interest, financial activity or non-financial entity, which motivation may include that— |
| (i) | the inclusion of the said financial entity or activity, or non-financial entity, is inappropriate or may be misleading; |
| (ii) | the bank or controlling company's interest was acquired as a result of debt previously extended and the acquired interest is held on a temporary basis; |
| (iii) | consolidation of the said entity or interest— |
(A) is prohibited by law; or
(B) due to legal constraints, is restricted;
| (iv) | the aggregate amount of assets relating to such a financial entity, interest or activity, or non-financial entity, amounts to less than 1 per cent of the consolidated assets of the banking group that are subject to consolidated supervision and the risk profile of such a financial entity, interest or activity, or non-financial entity, as the case may be, does not materially affect the risk profile of the said banking group. |
| (b) | The Registrar may grant approval to exclude from consolidation for such time and subject to such conditions as may be specified in writing by the Registrar such financial entity, interest or activity, or non-financial entity as may be specified in writing by the Registrar, provided that— |
| (i) | in all cases the Registrar shall obtain from the relevant bank or controlling company, or a relevant supervisory authority, sufficiently detailed information in order for the Registrar— |
| (A) | to assess the risks incurred by the relevant entity; |
| (B) | to be satisfied that the relevant entity is sufficiently capitalized and does not constitute a material risk to the safety and soundness of the relevant bank or controlling company; |
| (A) | any majority owned or controlled financial entity or activity; or |
| (B) | any significant minority owned or controlled financial entity or activity, |
the bank or controlling company shall in addition to the amounts specified in subregulation (10)(b) above deduct from its consolidated amount of capital and reserve funds such amounts as may be specified in writing by the Registrar.
