CA-2.1.1
Tier 1 capital shall consist of the sum of items (a) to (f) below, less the sum of items (g) to (k) below:
(a) Issued and fully paid ordinary shares and perpetual non-cumulative preference shares, but excluding cumulative preference shares;
(b) Certain innovative capital instruments such as instruments with step-ups, subject to the fulfilment of criteria given in paragraph CA-2.1.2 to CA-2.1.4 and the limit given in paragraph CA-2.2.2.
(c) Disclosed reserves, including:
• General reserves
• Legal / statutory reserves
• Share premium
• Capital redemption reserve
• Excluding fair value reserves3
(d) Retained profit brought forward;
(e) Unrealized net gains arising from fair valuing equities4; and
(f) Minority interest in subsidiaries Tier 1 equity. arising on consolidation, in the equity of subsidiaries which are less than wholly owned. Further guidance on minority interests is provided in paragraphs PCD-A.2.11, PCD-1.1.3 and PCD-1.1.4 of the Prudential Consolidation and Deduction Requirements Module.
LESS:
(g) Goodwill;
(h) Current interim cumulative net losses;
(i) Unrealized gross losses arising from fair valuing equity securities5;
(j) Other deductions made on a pro-rata basis between Tier 1 and Tier 2;
(k) Reciprocal cross holdings of other banks' capital.
3 This refers to unrealised fair value gains reported directly in equity (such gross gains are included in Tier 2).
4 This refers to unrealised net fair value gains taken through P&L (which have been audited). Please note that the unrealised net gains related to unlisted equities taken through P&L arising on or after January 1, 2008 will be subject to 55% discount as stated in CA-2.1.5(c)ii.
5 This refers to both 'net losses taken through P&L' and 'gross losses reported directly in equity'.
Apr 08