4.18 .Tier 2 Capital (T2 Capital)

T2 Capital is the sum of the following elements:

1. (a) instruments issued by the Bank that satisfy the criteria in Rule 4.19 for inclusion in T2 Capital (and are not included in T1 Capital);
2. (b) share premium resulting from the issue of instruments included in T2 Capital according to
3. (a), if any;
4. (c) instruments, issued by consolidated Subsidiaries of the Bank and held by third parties, that satisfy the criteria in Rule 4.24 for inclusion in T2 Capital (and are not included in T1 Capital);
5. (d) regulatory adjustments applied in the calculation of T2 Capital in accordance with Rule 4.28;
6. (e) general provisions or general reserves held against future, presently unidentified losses (but only up to a maximum of 1.25% of risk-weighted assets for Credit Risk, calculated using the standardised approach in Chapter 5 of BBR).

Note General provisions and reserves are freely available to meet losses that subsequently materialise and therefore qualify for inclusion in T2 Capital. In contrast, provisions for identified deterioration of particular assets or known liabilities, whether individual or grouped, must be excluded because they would not be available to meet losses.