1.1 Large Exposures

Large exposures are those funded and unfunded exposures (less provisions, cash collaterals and deposits under lien) which a bank allows to a single borrower and his group which in total equal or exceed the percentages of the bank's capital base as scheduled in Article (2) of these Regulations.

In addition, a large exposure secured by securities acceptable to the Central Bank can be adjusted to reflect a deduction for the value of said securities. The Central Bank shall determine the adjusted value based on the quality of the acceptable securities in each case, which is considered a large exposure. The portion of the funded and unfunded exposures above the adjusted value are subject to the schedule of percentage limits for large exposures in Article (2) of these Regulations.

1.2 Exposures

Exposures comprise the on- and off-balance sheet items set out in the attached "Guidelines to Monitoring of Large Exposure Limits," which form an integral part of these Regulations.

1.3 Borrowers and Groups of Related Borrowers

A single borrower shall mean any single natural or juridical person.

A group of related borrowers shall mean:

- Two or more natural or juridical persons who unless shown otherwise, constitute a single risk because one of them, directly or indirectly, has control over the other or others, or can exercise a controlling influence over the other party in making financial and operating decisions; or

- Two or more natural or juridical persons between whom there is no relationship of control but who are to be regarded as constituting a single risk because they are so inter-related that, if one of them were to experience financial problems, the other or all of the others would be likely to encounter repayment difficulties.

1.4 Control and Controlling Influence

Control or controlling influence shall mean the relationship between a parent company and a subsidiary, as defined in section 1.4 of the attached "Guidelines to Monitoring of Large Exposure Limits" or a similar relationship between any natural of juridical person and a company.

1.5 Principal Shareholders

In the context of these Regulations, a principal shareholder shall mean any natural or juridical person, single or related as defined in section 1.3 above, holding 5% or more of a bank's voting share capital.

1.6 Capital Base

The capital base of a bank is the same as that used for capital adequacy purposes, as defined in the Central Bank's Circular No. 27/2009 dated 17/11/2009 and calculation therein as per BASEL II.