10% limit for significant investments (for threshold exemptions determination purposes)

Article 470 of Regulation (EU) No 575/2013 (CRR) allows institutions not to deduct from relevant Common Equity Tier 1 (CET 1) items those items laid down in Article 470(2)(a) and (b) (i.e. deferred tax assets (DTAs) that are dependent on future profitability and arise from temporary differences and significant investments in a financial sector entity (SFIs)) where such items in aggregate are equal or less than 15% of the relevant CET 1 items. The amount eligible to be included in the 15% threshold exemption are those amounts up to 10% of the relevant CET1 items for each of the referred DTAs and SFIs. Therefore, the applicable percentage of the following amounts shall be deducted from CET1 items: the amount of the abovementioned DTAs that exceeds the 10% of the relevant CET1 items; the amount of SFIs that exceeds the 10% of the relevant CET1 items; the aggregate amount of the sum of SFIs and the referred DTAs that are not deducted in accordance with (1) and (2) that exceeds the threshold of the 15% of the relevant CET1 items The amounts under the abovementioned deduction thresholds shall be risk weighted at 250%. However, the amount of SFIs not deducted and that are part of the trading-book business of the institution shall instead be subject to the requirements for market risk (as per Part Three, Title IV of the CRR). Depending on the applicable percentages envisaged in Article 478 of the CRR to the amounts above the abovementioned deduction thresholds, the residual amounts shall be treated according to Article 472(5) or 472(11) of the CRR, as applicable. From 1 January 2018 onwards, the relevant items will be subject to the treatment set out in Article 48 of the CRR.