AI Summary of Article 48 Threshold exemptions from deduction from Common Equity Tier 1 items
This summary outlines the regulatory framework regarding the deductions of specific items as set out in Article 36(1). Institutions are permitted to exclude certain deferred tax assets and significant investments in financial sector entities from deductions, provided these amounts do not exceed 10% of their Common Equity Tier 1 items. This exclusion is contingent upon the institution's compliance with earlier Articles as specified.
Furthermore, the threshold amount for non-deduction equates to the residual Common Equity Tier 1 items multiplied by 17.65%. Any amounts not deducted will be risk-weighted at 250%, enhancing the prudential regulatory approach while safeguarding institutional integrity.
Article 48 Threshold exemptions from deduction from Common Equity Tier 1 items
1. In making the deductions required pursuant to points (c) and (i) of Article 36(1), institutions are not required to deduct the amounts of the items listed in points (a) and (b) of this paragraph which in aggregate are equal to or less than the threshold amount referred to in paragraph 2:
(a) deferred tax assets that are dependent on future profitability and arise from temporary differences, and in aggregate are equal to or less than 10 % of the Common Equity Tier 1 items of the institution calculated after applying the following:
(ii) Article 36(1), points (a) to (h), points (k)(ii) to (vi) and points (l), (m) and (n), excluding deferred tax assets that rely on future profitability and arise from temporary differences;