AI Summary of Article 44 Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds
This regulation mandates that institutions apply specific deductions as detailed in Article 36(1)(g), (h), and (i) with particular reference to their holdings related to financial sector entities. Gross long positions of Common Equity Tier 1 instruments and other relevant capital instruments must form the basis for these calculations.
Furthermore, it is stipulated that Tier 1 own-fund insurance items will be categorised as holdings of Common Equity Tier 1 instruments when applying these deductions. This alignment ensures consistency and clarity in the regulatory framework governing capital adequacy and risk management.
Article 44 Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds
Institutions shall make the deductions referred to in points (g), (h) and (i) of Article 36(1) in accordance with the following:
(a) holdings of Common Equity Tier 1 instruments and other capital instruments of financial sector entities shall be calculated on the basis of the gross long positions;
(b) Tier 1 own-fund insurance items shall be treated as holdings of Common Equity Tier 1 instruments for the purposes of deduction.