This chapter describes adjustments that must be made to the components of regulatory capital in order to calculate the amount of a bank's capital resources that may be used to meet prudential requirements.

Version effective as of 15 Dec 2019

First version in the format of the consolidated framework.

Introduction

30.1 This section sets out the regulatory adjustments to be applied to regulatory capital. In most cases these adjustments are applied in the calculation of Common Equity Tier 1.

30.2 Global systemically important banks (G-SIBs) are required to meet a minimum total loss-absorbing capacity (TLAC) requirement set in accordance with the Financial Stability Board’s (FSB) TLAC principles and term sheet. The criteria for an instrument to be recognised as TLAC by the issuing G-SIB are set out in the FSB’s TLAC Term Sheet. Bank that invest in TLAC or similar instruments may be required to deduct them in the calculation of their own regulatory capital. [Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution, Total Loss-absorbing Capacity (TLAC) Term Sheet, Financial Stability Board, November 2015, available at www.fsb.org/wp-content /uploads/TLAC-Principles-and-Term-Sheet-for-publication-final.pdf. The regulatory adjustments for TLAC set out in CAP30 relate to Section 15 of the FSB TLAC Term Sheet.]

30.3 For the purposes of this section, holdings of TLAC include the following, hereafter collectively referred to as “other TLAC liabilities”: