Question
In order to determine the qualifying own funds for the different own funds elements (Common Equity Tier 1, Additional Tier 1 and Tier 2 capital), according to sub 1 of Articles 84, 85, 86, 87, 89, capital requirements should be taken into account. Suppose, the qualifying own funds of a non-regulated entity within the CRR scope of consolidation should be determined. Is our interpretation correct that, given the fact that no capital requirements exists for a non-regulated entity, the outcome of the calculation of the qualifying own funds of a non-regulated entity according to Articles 84, 85, 86, 87, 89 always equal zero?
Background on the question
It is not clear to us how to deal with qualifying own funds (columns 300-340) of non-regulated entities within the CRR scope of consolidation.
Answer
The question refers to two different aspects: the qualified own funds of non-regulated entities and the capital requirements of non-regulated entities. Qualified own funds of non-regulated entities (the "background of the question" asks how to deal with qualified own funds of non-regulated entities): According to Article 82(a) of Regulation (EU) No 575/2013 (CRR), qualifying own funds are only eligible if the entity is a subsidiary listed in (i) and (ii). Due to this limited scope, qualified own funds of non-regulated entities do not exist, which is why no amount shall be reported for those entities in columns 300-340 in template C 06.00. Capital requirements of non-regulated entities. Capital requirements of non-regulated entities exist on consolidated level (i.e. such entities contribute to the group risk and columns 250 to 290 of template C 06.00 should be filled in) but not on individual level.