4.1 Two or more counterparties shall be considered a Group Of Connected Counterparties if at least one of the following criteria is satisfied:

4.1.1 Control relationship: one of the counterparties, directly or indirectly, has control over the other(s).

4.1.2 Economic interdependence: if one of the counterparties were to experience financial problems, in particular funding or repayment difficulties, the other(s), as a result, would also be likely to encounter funding or repayment difficulties.

4.2 Banks must assess the relationship amongst counterparties against the criteria listed in Article 4.1 and take into account at least the criteria listed below in Article 4.3 and 4.4.

4.3 The following criteria must be considered to assess the control relationship between counterparties:

4.3.1 If one counterparty owns more than 50% of the voting rights of the other counterparty, Banks must consider the control relationship established;

4.3.2 Voting agreements whereby a majority of voting rights in one counterparty are controlled by another counterparty pursuant to an agreement with other shareholders;

4.3.3 Significant influence on the appointment or dismissal of an entity's board or senior management, such as the right to appoint or remove a majority of members in those bodies, or the fact that a majority of members have been appointed solely as a result of exercising an individual entity's voting rights;

4.3.4 Significant influence on senior management, such as where a counterparty has the power, through a contract or otherwise, to exercise a controlling influence over the management or policies of another counterparty, for example through consent rights over key decisions.

4.3.5 Control relationships as established by the applicable accounting standards.

4.4 The following criteria must be considered to assess the economic interdependence between counterparties:

4.4.1 Where at least half of one counterparty's annual gross receipts or gross expenditures is derived from transactions with the other counterparty. For example, the owner of a real estate portfolio rented out for the most part to a single tenant;

4.4.2 Where one counterparty has guaranteed an exposure of the other counterparty, or is liable by other means, and the exposure is so significant that the guarantor is likely to default if a claim occurs;

4.4.3 Where a significant part of one counterparty's output is sold to another counterparty, and that counterparty cannot easily be replaced by other customers;

4.4.4 When the expected source of funds to repay the loans of both counterparties is the same and neither counterparty has another independent source of income from which the loan may be serviced and fully repaid;

4.4.5 Where it is likely that the financial problems of one counterparty would cause difficulties for another counterparty in terms of full and timely repayment of liabilities;

4.4.6 Where the insolvency or default of one counterparty is likely to be associated with the insolvency or default of another counterparty;

4.4.7 When two or more counterparties rely on the same source for the majority of their funding and, in the event of the common provider's default, an alternative provider cannot be found and funding problems of one counterparty are likely to spread to another counterparty due to one-way or twoway dependence on the same main funding source.

4.5 Where a control relationship has been established based on the criteria set out in Article 4.3 above, a Bank may still approach the Central Bank to demonstrate and seek agreement that such control does not result in the entities concerned constituting a Group Of Connected Counterparties, for example due to specific circumstances and corporate governance safeguards.

4.6 Where economic interdependence has been established based on the criteria in Article 4.4 above, a Bank may still approach the Central Bank to demonstrate and seek agreement that a counterparty, while economically closely related to another counterparty, may still overcome financial difficulties, including the other counterparty's default.

4.7 Banks may apply proportionality and apply a risk-based approach when assessing economic interdependence. However, Banks must identify the Group Of Connected Counterparties on the basis of economic interdependence in all cases where the sum of all exposures to one individual counterparty exceeds 5% of Tier 1 capital.

4.8 The Central Bank may at its own discretion determine that certain exposures must be considered a Group Of Connected Counterparties.