Calculation methodology for Method 2 pursuant to Directive 2002/87/EC
ANNEXSupplementary provisions
ANNEX Calculation methodology for Method 2 pursuant to Directive 2002/87/EC Deduction and aggregation method The calculation of supplementary capital adequacy requirements under method 2 shall be carried out on the basis of the applicable accounting framework of each of the entities in the group following the formulaic expression below: where own funds ( OF i ) exclude intra-group capital instruments that are eligible as own funds in accordance with sectoral rules. The supplementary capital adequacy requirements ( scar ) shall thus be calculated as the difference between: 1. the sum of the own funds ( OF i ) of each regulated and non-regulated financial sector entity ( i ) in the financial conglomerate; the elements eligible are those which qualify in accordance with the relevant sectoral rules; and 2. the sum of the solvency requirements (REQi) for each regulated and non-regulated financial sector entity (i) in the group (G); the solvency requirements shall be calculated in accordance with the relevant sectoral rules; and the book value (BVj) of the participations in other entities (j) of the group. In the case of non-regulated financial sector entities, a notional solvency requirement shall be calculated in accordance with Article 12. Own funds and solvency requirements shall be taken into account for their proportional share ( x ) as provided for in Article 6(4) of Directive 2002/87/EC and in accordance with Annex I to that Directive. The difference shall not be negative.