Chapter One: Capital Adequacy Standard

Part One: Application Rules

1/1 Scope of Application

These application rules apply to all institutions subject to the Capital Adequacy Standard, as follows:

1/1/1 Institutions that do not meet the criteria for the simplified application rules, or where the total assets of the institution exceed 50% of the total assets of the banking sector, must apply the full Capital Adequacy Standard. This includes institutions where the total assets of the institution exceed 50% of the total assets of the banking sector, or where the total assets of the institution exceed 50% of the total assets of the banking sector.

2/1/1 Institutions subject to the simplified application rules must maintain a capital adequacy ratio of at least 10% of the minimum capital requirement. This applies to institutions where the total assets of the institution do not exceed 50% of the total assets of the banking sector, or where the total assets of the institution do not exceed 50% of the total assets of the banking sector.

3/1/1 Institutions subject to the simplified application rules must comply with the Capital Adequacy Standard as of the end of 2012. Institutions subject to the full Capital Adequacy Standard must comply as of the end of 2013. However, the Central Bank may grant an extension of up to one year if the institution demonstrates that it is unable to comply due to force majeure.

4/1/1 Institutions subject to the full Capital Adequacy Standard must comply as of the end of 2016. Institutions subject to the simplified application rules must comply as of the end of 2016. The capital adequacy ratio must be at least 2.5% as of the end of 2019, in addition to the capital conservation buffer.

5/1/1 The Central Bank may grant an exemption from the application of these rules to any institution that demonstrates that it is unable to comply due to force majeure.

6/1/1 The Central Bank may grant an exemption from the application of these rules to any institution that demonstrates that it is unable to comply due to force majeure.

7/1/1 The Central Bank may grant an exemption from the application of these rules to any institution that demonstrates that it is unable to comply due to force majeure.

8/1/1 The Central Bank may grant an exemption from the application of these rules to any institution that demonstrates that it is unable to comply due to force majeure.

2/1 General Definitions

1/2/1 Capital Instruments: These are instruments that meet the criteria for capital instruments, as defined in the Capital Adequacy Standard.

2/2/1 Risk-Weighted Assets: These are assets that are weighted according to their risk, as defined in the Capital Adequacy Standard.

3/2/1 Capital Adequacy: This is the ratio of capital to risk-weighted assets, as defined in the Capital Adequacy Standard.

4/2/1 Credit Risk: This is the risk of loss due to a borrower's failure to repay a loan or meet contractual obligations.

5/2/1 Market Risk: This is the risk of loss due to changes in market prices, such as interest rates, exchange rates, and commodity prices.

6/2/1 Operational Risk: This is the risk of loss due to inadequate or failed internal processes, people, and systems, or from external events.

7/2/1 Counterparty Risk: This is the risk of loss due to the failure of a counterparty to meet its contractual obligations.

8/2/1 Concentration Risk: This is the risk of loss due to excessive exposure to a single counterparty, industry, or geographic region.

9/2/1 Liquidity Risk: This is the risk of loss due to the inability to meet financial obligations as they come due.

10/2/1 Interest Rate Risk: This is the risk of loss due to changes in interest rates.

11/2/1 Foreign Exchange Risk: This is the risk of loss due to changes in foreign exchange rates.

12/2/1 Equity Risk: This is the risk of loss due to changes in equity prices.

13/2/1 Commodity Risk: This is the risk of loss due to changes in commodity prices.

14/2/1 Derivative Risk: This is the risk of loss due to changes in the value of derivative instruments.