1.The following weightings shall be applied to the various categories of asset items, altough the competent authorities may fix higher weightings as they see fit:
(a)
Zero weighting
cash in hand and equivalent items;
2.asset items constituting claims on Zone A central governments and central banks;
3.asset items constituting claims on the European Communities;
4.asset items constituting claims carrying the explicit guarantees of Zone A central governments and central banks;
5.asset items constituting claims on Zone B central governments and central banks, denominated and funded in the national currencies of the borrowers;
6.asset items constituting claims carrying the explicit guarantees of Zone B central governments and central banks, denominated and funded in the national currency common to the guarantor and the borrower;
7.asset items secured, to the satisfaction of the competent authorities, by collateral in the form of Zone A central government or central bank securities, or securities issued by the European Communities, or by cash deposits placed with the lending institution or by certificates of deposit or similar instruments issued by and lodged with the latter;
(b)
20 % weighting
1.asset items constituting claims on the European Investment Bank (EIB);
2.asset items constituting claims on multilateral development banks;
3.asset items constituting claims carrying the explicit guarantee of the European Investment Bank (EIB);
4.asset items constituting claims carrying the explicit guarantees of multilateral development banks;
5.asset items constituting claims on Zone A regional governments or local authorities, subject to Article 7;
6.asset items constituting claims carrying the explicit guarantees of Zone A regional governments or local authorities, subject to Article 7;
7.asset items constituting claims on Zone A credit institutions but not constituting such institutions' own funds as defined in Directive 89/299/EEC;
8.asset items constituting claims, with a maturity of one year or less, on Zone B credit institutions, other than securities issued by such institutions which are recognized as components of their own funds;
9.asset items carrying the explicit guarantees of
Zone A credit institutions;
10.asset items constituting claims with a maturity of one year or less, carrying the explicit guarantees of Zone B credit institutions;
11.asset items secured, to the satisfaction of the competent authorities, by collateral in the form of securities issued by the EIB or by multilateral development banks;
12.cash items in the process of collection;
(c)
50 % weighting
1.loans fully and completely secured, to the satisfaction of the competent authorities, by mortgages on residential property which is or will be occupied or let by the borrower;
2.prepayments and accrued income: these assets shall be subject to the weighting corresponding to the counterparty where a credit institution is able to determine it in accordance with Directive 86/635/EEC. Otherwise, where it is unable to determine the contraparty, it shall apply a flat-rate weighting of 50 %;
(d)
100 % weighting
1.asset items constituting claims on Zone B central governments and central banks except where denominated and funded in the national currency of the borrower;
2.asset items constituting claims on Zone B regional governments or local authorities;
3.asset items constituting claims with a maturity of more than one year on Zone B credit institutions;
4.asset items constituting claims on the Zone A or
Zone B non-bank sectors;
5.tangible assets within the meaning of assets as listed in Article 4 (10) of Directive 86/635/EEC;
6.holdings of shares, participations and other components of the own funds of other credit institutions which are not deducted from the own funds of the lending institutions;
7.all other assets except where deducted from own funds.
2.The following treatment shall apply to off-balance-sheet items other than those covered in paragraph 3. They shall first be grouped according to the risk groupings set out in Annex I. The full value of the full-risk items shall be taken into account, 50 % of the value of the medium-risk items and 20 % of the medium/low-risk items, while the value of low-risk items shall be set at zero. The
second stage shall be to multiply the off-balance-sheet values, adjusted as described above, by the weightings attributable to the relevant counterparties, in accordance with the treatment of asset items prescribed in paragraph 1 and Article 7. In the case of asset sale and repurchase agreements and outright forward purchases, the weightings shall be those attaching to the assets in question and not to the counterparties to the transactions.
3.The methods set out in Annex II shall be applied to the interest-rate and foreign-exchange risks listed in Annex III.
4.Where off-balance-sheet items carry explicit guarantees, they shall be weighted as if they had been incurred on behalf of the guarantor rather than the counterparty. Where the potential exposure arising from off-balance-sheet transactions is fully and completely secured, to the satisfaction of the competent authorities, by any of the asset items recognized as collateral in paragraph 1 (a) (7) or (b) (11), weightings of 0 % or 20 % shall apply, depending on the collateral in question.
5.Where asset and off-balance-sheet items are given a lower weighting because of the existence of explicit guarantees or collateral acceptable to the competent authorities, the lower weighting shall apply only to that part which is guaranteed or which is fully covered by the collateral.