Book traversal links for 1. Scope of Application
1. Scope of Application
C 52/2017 STA Effective from 1/12/20221.This Standard formulates capital adequacy requirements that need to be applied to all banks in UAE on a consolidated basis. The consolidated entity includes all worldwide banking subsidiaries, however it excludes insurance companies and non-financial commercial entities that are subsidiaries of the entity licensed in the UAE.
2.Banks are required to deduct, from CET1, the full amount of any capital shortfall of subsidiaries that are regulated and are subject to capital requirements on a worldwide basis. Additionally, any shortfall in the capital requirement of unconsolidated subsidiary (e.g. insurance, commercial entity) must be fully deducted from the CET1 capital (at stand-alone as well as consolidated level)
3.The amount of the capital requirement and capital shortfall for this deduction is to be based on the regulations issued by the subsidiary’s regulator (i.e. based on the host regulator’s capital adequacy requirements).
4.The Standards follow the international calibration as developed by the Basel Committee, imposing risk weights up to 1250% for assets. The UAE adopted a higher minimum capital requirement of 10.5% minimum CAR (without the capital conservation buffer). Taking into consideration the higher minimum capital requirements of 10.5% in the UAE, the risk weight shall be capped at 952% (reciprocal of 10.5%).