AI Summary of Article 85 Qualifying Tier 1 instruments included in consolidated Tier 1 capital
This regulation outlines the methodology for determining the qualifying Tier 1 capital that subsidiaries contribute to a consolidated entity's own funds. Institutions are required to calculate this amount by deducting from the subsidiary’s Tier 1 capital either specific regulatory requirements or the consolidated capital related to that subsidiary, expressed as a percentage of all Common Equity Tier 1 and Additional Tier 1 items.
Furthermore, institutions have the option to forgo this calculation for certain subsidiaries, which would mean their qualifying Tier 1 capital is excluded from the consolidated total. Any derogations granted by competent authorities regarding prudential requirements imply that the associated Tier 1 instruments will not count towards own funds, either at a sub-consolidated or consolidated level.
Article 85 Qualifying Tier 1 instruments included in consolidated Tier 1 capital
1. Institutions shall determine the amount of qualifying Tier 1 capital of a subsidiary that is included in consolidated own funds by subtracting from the qualifying Tier 1 capital of that undertaking the result of multiplying the amount referred to in point (a) by the percentage referred to in point (b) as follows:
(a) the Tier 1 capital of the subsidiary minus the lower of the following:
the amount of Tier 1 capital of the subsidiary required to meet the following:
(1) where the subsidiary is one of those listed in Article 81(1), point (a), of this Regulation but not an investment firm or an intermediate investment holding company, the sum of the requirement laid down in Article 92(1), point (b), of this Regulation, the requirements referred to in Articles 458 and 459 of this Regulation, the specific own funds requirements referred to in Article 104 of Directive 2013/36/EU and the combined buffer requirement defined in Article 128, point (6), of that Directive, or any local supervisory regulations in third countries insofar as those requirements are to be met by Tier 1 capital;