21.Intangible assets typically do not generate any cash flows and hence their value, when a bank is in need of immediate additional capital to absorb losses, is uncertain. For this reason, all intangible assets are deducted from CET1 (5.1.8.1).

22.From regulatory perspective, goodwill and intangible assets have the same meaning as under IFRS.

23.Capitalized software costs that is not “integral to hardware” is to be treated as an intangible asset and software that is “integral to hardware” is to be treated as property, plant and equipment (i.e. as a fixed asset).

24.The amount of intangible assets to be deducted should be net of any associated deferred tax liability (DTL) that would be extinguished if the asset became impaired or derecognised under the applicable accounting standards.

25.Goodwill and intangible assets that are deducted from CET1, they are excluded from the calculation of RWA for credit risk exposure value.

26.Deferred tax assets (DTAs) typically arise when a bank:

1. •suffers a net loss in a financial year and is permitted to carry forward this loss to offset future profits when calculating its tax bill (net losses carried forward)
2. •has to reduce the value of an asset on the balance sheet, but this 'loss in value' is not recognised by the tax authorities until a future period (temporary timing difference)

27.DTAs arising from net losses carried forward have to be deducted in full from a bank's CET1 (5.1.8.2). This recognises that their value can only be derived through the existence of future taxable income. On the other hand, a DTA relying on future profitability and arising from temporary timing differences is subject to the 'threshold deduction rule' (5.1.9.2).