| (14) | Matters related to specified minority interests, that is, non-controlling interests, in shares and/or instruments issued out of consolidated subsidiaries that is held by third parties, qualifying as capital |
In the case of—
[Regulation 38(14) substituted by regulation 22(ss) of Notice No. 297, GG 40002, dated 20 May 2016]
| (a) | any minority interest arising from the issue of shares or instruments by a fully consolidated subsidiary of the reporting bank or controlling company, the relevant proceeds may be included in the bank or controlling company's common equity tier 1 capital and reserve funds only when— |
[Regulation 38(14)(a) substituted by regulation 22(tt) of Notice No. 297, GG 40002, dated 20 May 2016]
| (i) | the share or instrument giving rise to the minority interest would, if issued by the relevant bank or controlling company, comply with all the relevant criteria and requirements specified in subregulation (11)(a); and |
[Regulation 38(14)(a)(i) substituted by regulation 22(uu) of Notice No. 297, GG 40002, dated 20 May 2016]
| (ii) | the subsidiary that issued the share or instrument is itself a bank or, subject to the prior written approval of and such conditions as may be specified in writing by the Registrar, a non-bank institution that is subject to the same minimum prudential standards and level of supervision as a bank, that is, when capital has been issued to third parties out of a specialpurpose vehicle or entity, none of that capital shall be included in the bank or controlling company's common equity tier 1 capital, |
Provided that the amount of minority interest that complies with the specified criteria or requirements and that may be included in the relevant consolidated amount of common equity tier 1 capital and reserve funds shall be calculated as total minority interest meeting the specified criteria minus the amount of the surplus common equity tier 1 capital of the subsidiary attributable to the minority shareholders, provided that—
[Wording of proviso of preceding regulation 38(14)(a)(A) substituted by regulation 22(vv) of Notice No. 297, GG 40002, dated 20 May 2016]
| (A) | the surplus amount of common equity tier 1 capital of the subsidiary shall be calculated as the common equity tier 1 capital of the subsidiary minus the lower of— |
| (i) | the relevant minimum requirement of common equity tier 1 capital of the subsidiary plus the relevant specified required capital conservation buffer, that is, for example, 7 per cent of risk weighted exposure; and |
| (ii) | the portion of the consolidated minimum common equity tier 1 capital requirement plus the relevant specified capital conservation buffer, that is, for example, 7 per cent of the consolidated risk weighted exposure, that relates to the subsidiary; |
| (B) | the surplus amount of common equity tier 1 capital attributable to the minority shareholders shall be calculated by multiplying the surplus common equity tier 1 capital with the relevant percentage of common equity tier 1 capital that is held by minority shareholders. |
| (b) | shares or instruments issued by a fully consolidated subsidiary of the reporting bank or controlling company to third party investors, including any relevant amount envisaged in paragraph (a) above, the relevant proceeds may be included in the total amount of tier 1 capital and reserve funds only when the relevant instruments would, if issued by the bank or controlling company, comply with all the relevant criteria or requirements specified in subregulation (11)(a) or (11)(b), provided that the amount of capital that may be included in tier 1 capital shall be the total amount of tier 1 capital of the subsidiary issued to third parties minus the surplus amount of tier 1 capital of the subsidiary attributable to the third party investors, provided that— |
[Wording preceding regulation 38(14)(b)(i) substituted by regulation 22(ww) of Notice No. 297, GG 40002, dated 20 May 2016]
| (i) | the surplus amount of tier 1 capital of the subsidiary shall be calculated as the tier 1 capital amount of the subsidiary minus the lower of: |
| (A) | the minimum tier 1 capital requirement of the relevant subsidiary plus the relevant capital conservation buffer, that is, for example, 8,5 per cent of risk weighted exposure; and |
| (B) | the portion of the minimum consolidated requirement of tier 1 capital plus the relevant capital conservation buffer, that is, for example, 8,5 per cent of the consolidated amount of risk weighted exposure that relates to the subsidiary; |
| (ii) | the surplus amount of tier 1 capital attributable to the third party investors shall be calculated by multiplying the surplus amount of tier 1 capital with the relevant percentage of tier 1 capital held by the relevant third party investors; |
| (iii) | the amount that may be recognised as additional tier 1 capital shall be the total amount calculated in terms of the provisions of this paragraph (b) minus the relevant amount calculated and recognised in terms of the provisions of paragraph (a) above; |
| (iv) | when the capital has been issued to third parties out of a special-purpose vehicle or entity, such capital may be included in consolidated additional tier 1 capital, and treated as if the bank or controlling company itself had issued the capital directly to the third parties, only if it meets all the relevant specified entry criteria or requirements and the only asset of the special-purpose vehicle or entity is its investment in the capital of the relevant bank or controlling company in a form that as a minimum complies with all the relevant entry criteria specified in subregulations (11)(b)(ii) to (11)(b)(vii), provided that when the capital has been issued to third parties through a special-purpose vehicle or entity via a fully consolidated subsidiary of the bank or controlling company, such capital may, subject to the relevant requirements specified above, and such further conditions or requirements as may be specified in writing by the Registrar, be treated as if the subsidiary itself had issued it directly to the third parties, and may be included in the relevant consolidated amount of additional tier 1 capital in accordance with the relevant requirements specified in this subregulation (16); |
[Regulation 38(14)(b)(iv) substituted by regulation 22(xx) of Notice No. 297, GG 40002, dated 20 May 2016]
| (c) | shares or instruments issued by a fully consolidated subsidiary of the reporting bank or controlling company to third party investors, including any relevant amount envisaged in paragraph (a) or (b) above, the relevant proceeds may be included in the total amount of qualifying tier 1 and tier 2 capital and reserve funds only when the relevant shares or instruments would, when issued by the relevant bank or controlling company, comply with all of the relevant criteria or requirements specified in these Regulations for common equity tier 1 capital, additional tier 1 capital or tier 2 capital, provided that the amount that may be included in the total consolidated amount of capital and reserve funds shall be the relevant total amount of capital of the relevant subsidiary issued to third parties minus the surplus amount of total capital of the subsidiary attributable to the third party investors, provided that— |
| (i) | the surplus amount of total capital of the subsidiary shall be calculated as the total capital of the subsidiary minus the lower of: |
| (A) | the relevant minimum total capital requirement of the subsidiary plus the relevant capital conservation buffer, that is, for example, 10,5 per cent of risk weighted exposure; and |
| (B) | the portion of the consolidated minimum total capital requirement plus the capital conservation buffer, that is, for example, 10,5 per cent of consolidated risk weighted exposure that relates to the subsidiary; |
| (ii) | the surplus amount of total capital attributable to the third party investors shall be calculated by multiplying the surplus total capital with the relevant percentage of total capital held by third party investors; |
| (iii) | the relevant amount that may be included in tier 2 capital shall be the total amount calculated in terms of the provisions of this paragraph (c) minus the relevant amounts calculated and recognised in terms of the provisions of paragraphs (a) and (b) above; |
| (iv) | when the capital has been issued to third parties out of a special-purpose vehicle or entity, such capital may be included in consolidated additional tier 1 capital or tier 2 capital, and treated as if the bank or controlling company itself had issued the capital directly to the third parties, only if it meets all the relevant specified entry criteria or requirements and the only asset of the special purpose vehicle or entity is its investment in the capital of the relevant bank or controlling company in a form that as a minimum complies with all the relevant entry criteria specified in subregulation (11) or (12), provided that when the capital has been issued to third parties through a special-purpose vehicle or entity via a fully consolidated subsidiary of the bank or controlling company, such capital may, subject to the relevant requirements specified above, and such further conditions or requirements as may be specified in writing by the Registrar, be treated as if the subsidiary itself had issued it directly to the third parties, and may be included in the relevant consolidated amount of additional tier 1 capital or tier 2 capital in accordance with the relevant requirements specified in this subregulation (14). |
[Regulation 38(14)(c)(iv) substituted by regulation 22(yy) of Notice No. 297, GG 40002, dated 20 May 2016]
[Regulation 38(16) renumbered as regulation 38(14) by regulation 22(kk)(iv), and heading substituted by regulation 22(ss), of Notice No. 297, GG 40002, dated 20 May 2016]
