PRU 3.10.7

Subject to the following Rules in this Section, an Authorised Person must deduct the following from the calculation of its CET1 Capital:

(a) losses for the current financial year;
(b) goodwill and other intangible assets as defined in the International Financial Reporting Standards;
(c) deferred tax assets that rely on future profitability;
(d) defined benefit pension fund assets of the Authorised Person;
(e) the applicable amount, by reference to Rule 3.10.12, of direct and indirect holdings by an Authorised Person of its own CET1 Capital instruments including instruments under which an Authorised Person is under an actual or contingent obligation to effect a purchase by virtue of an existing contractual obligation;
(f) holdings of the CET1 Capital instruments of Relevant Entities where those entities have a reciprocal cross holding with the Authorised Person which have the effect of artificially inflating the Capital Resources of the Authorised Person;
(g) the applicable amount, by reference to Rule 3.10.13, of direct and indirect holdings by the Authorised Person of CET1 Capital instruments of Relevant Entities where the Authorised Person does not have a significant investment in those entities;
(h) the applicable amount, by reference to Rules 3.10.13 and 3.10.18, of direct and indirect holdings by the Authorised Person of the CET1 Capital instruments of Relevant Entities where the Authorised Person has a significant investment in those entities;
(i) the amount of items required to be deducted from the calculation of AT1 Capital in accordance with the relevant Rules under Section 3.11, that exceeds the AT1 Capital of the Authorised Person;
(j) the Exposure amount of the following items which qualify for a risk weight of 1000%, where the Authorised Person deducts that Exposure amount from CET1 Capital as an alternative to applying a risk weight of 1000%:
(i) Qualifying Holdings;
(ii) securitisation positions, in accordance with relevant Rules in Chapter 4; and
(iii) free deliveries, in accordance with the Rules in Section A4.6; and
(k) for an Authorised Person which is a Partnership, the amount by which the aggregate of the amounts withdrawn by its Partners or members exceeds the profits of that firm.