BKLM323100 - Chargeable equity and liabilities: relevant entities and groups: relevant non-banking groups: Type A equity and liabilities

Paragraph 19(3) of Schedule 19

Type A equity and liabilities pick up the chargeable equity and liabilities from the consolidated financial statements of any relevant UK banking sub-group within a non-banking group.

A UK banking sub-group is a group of entities that:

  • constitute a group under the provisions of IAS or UK GAAP
  • have a UK resident parent entity that is a UK resident bank, and
  • are all members of the relevant non-banking group.

It becomes a 'relevant' UK banking sub-group where:

  • consolidated financial statements are prepared under either IAS or UK GAAP for the chargeable period, and
  • the members of the group are not members of a larger UK banking sub-group for which consolidated financial statements are prepared.

The starting point for determining the Type A equity and liabilities is the relevant UK banking sub-group's consolidated financial statements.

Paragraph 19(6) of Schedule 19

To determine the chargeable equity and liabilities that make up the Type A equity and liabilities, the following steps are taken:

  1. ignore excluded equity and liabilities (see BKLM330000) within the total equity and liability figures taken from the relevant UK sub-group's consolidated financial statements
  2. then make any intra-group adjustments or eliminations
  3. adjust for relevant legally enforceable netting (see BKLM350000)
  4. adjust for joint ventures (see BKLM323500), and
  5. finally, reduce the remaining equity and liabilities (but not below nil) by the amount of the relevant UK-banking sub-group's relevant high quality liquid assets (see BKLM360000).

To avoid double relief, the deduction for high quality liquid assets should be restricted by any amounts which have already been excluded through adjustments for netting.

Note: For chargeable periods ending on or before 31 December 2014, any high quality liquid assets should be set against long term equity and liabilities before short term liabilities.

For chargeable periods ending on or after 1 January 2015, there is no prescribed order of set off for high quality liquid assets, but where high quality liquid assets are set against short term liabilities, the reduction is halved.

Type A equity and liabilities may be ignored if they meet the de minimis conditions (see BKLM380000).