They may also be required in relation to assets that cannot readily be converted into cash. (2) Adjustments can be made to all 3 categories of regulatory capital, but most of them are to CET 1 capital. 3.2.21 Approaches to valuation and adjustment (1) A banking business firm must use the same approach for valuing regulatory adjustments to its capital as it does for balance-sheet valuations. An item that is deducted from capital must be valued in the same way as it would be for inclusion in the balance sheet. firm’s (2) The firm must use the corresponding deduction approach and the threshold deduction rule in making adjustments to its capital. 3.2.22 Definitions for Division 3.2.D In this Division: means any of the following entities: entity concerned (a) a banking business firm; (b) any other financial or insurance entity; (c) an entity over which a banking business firm exercises control. is defined in the glossary. Exercise control Note by a banking business firm in an entity significant investment, concerned, means an investment of 10% or more in the common shares, or other instruments that qualify as capital, of the entity concerned. includes a direct, indirect and synthetic holding Investment of capital instruments. Subdivision 3.2.D.2 Adjustments to common equity tier 1 capital 3.2.23 Form of adjustments Adjustments to CET 1 capital must be made in accordance with this Subdivision. Regulatory adjustments are generally in the form of deductions, but they may also be in the form of recognition or derecognition of items in the calculation of a capital. firm’s 3.2.24 Goodwill and intangible assets A banking business firm must deduct from CET 1 capital the amount of its goodwill and other intangible assets (except mortgage servicing
They may also be required in relation to assets that cannot readily be converted into cash. (2) Adjustments can be made to all 3 categories of regulatory capital, but most of them are to CET 1 capital. 3.2.21 Approaches to valuation and adjustment (1) A banking business firm must use the same approach for valuing regulatory adjustments to its capital as it does for balance-sheet valuations. An item that is deducted from capital must be valued in the same way as it would be for inclusion in the firm’s balance sheet. (2) The firm must use the corresponding deduction approach and the threshold deduction rule in making adjustments to its capital. 3.2.22 Definitions for Division 3.2.D In this Division: entity concerned means any of the following entities: (a) a banking business firm; (b) any other financial or insurance entity; (c) an entity over which a banking business firm exercises control. Note Exercise control is defined in the glossary. significant investment, by a banking business firm in an entity concerned, means an investment of 10% or more in the common shares, or other instruments that qualify as capital, of the entity concerned. Investment includes a direct, indirect and synthetic holding of capital instruments. Subdivision 3.2.D.2 Adjustments to common equity tier 1 capital 3.2.23 Form of adjustments Adjustments to CET 1 capital must be made in accordance with this Subdivision. Regulatory adjustments are generally in the form of deductions, but they may also be in the form of recognition or derecognition of items in the calculation of a firm’s capital. 3.2.24 Goodwill and intangible assets A banking business firm must deduct from CET 1 capital the amount of its goodwill and other intangible assets (except mortgage servicing
QFCRA_9582_VER5.docx