CA-3.5.22
The following tables set out the applicable stage of the contract that attracts capital charges:
Operating Ijara
Applicable Stage of the Contract | Credit RW | Market Risk Capital Charge |
Asset available for lease (prior to signing a lease contract) | Binding PL* Asset acquisition cost less (a) market value of asset fulfilling function of collateral (net of any haircuts), and (b) any HJ multiply by the customer's rating or 100% RW for unrated customer |
Non-binding PL 15% capital charge until lessee takes possession |
Asset available for lease and the lease rental payments are due from the lessee | Total estimated value of lease receivables for the whole duration of leasing contract is risk-weighted according to the lessee's rating. 100% RW for an unrated lessee less residual value of the leased asset |
The residual value is risk-weighted at 100% |
Maturity of contract term and the leased asset is returned to the bank | Not applicable | 15% capital charge of the carrying value of the asset |
* This credit RW is applicable only when the bank has recourse to any HJ paid by the customer, and (depending on the legal situation) may have a right to recoup from the customer any loss on leasing or disposing of the asset to a third party, after taking account of the HJ. If the bank has no such right, the cost of the asset to the bank constitutes a
January 2015