3.“Financial activities” do not include insurance activities and “financial entities” do not include insurance entities.

4.Examples of the types of activities that financial entities might be involved in include financial leasing, issuing credit cards, portfolio management, investment advisory, custodial and safekeeping services and other similar activities that are ancillary to the business of banking

Treatment of investment in Insurance Entities

5.Insurance subsidiaries are to be deconsolidated for regulatory capital purposes (i.e. all equity, assets, liabilities and third-party capital investments in such insurance entities are to be removed from the bank’s balance sheet) and the book value of the investment in the subsidiary is to be included in the aggregate investments.

6.Investments in the capital of insurance entities where the bank owns more than 10% of the insurance entity’s common share capital will be subject to the “Threshold deductions” treatment. Amounts below the threshold that are not deducted are to be risk weighted at 250 %.

(Investments in insurance entities wherein ownership is greater than 10% will also include insurance subsidiaries)