Basel III definition of capital - Frequently asked questions

July 2011

Note: This initial set of FAQs has been superseded by the version of 20 October 2011.

The Basel Committee on Banking Supervision has received a number of interpretation questions related to the 16 December 2010 publication of the Basel III regulatory frameworks for capital and liquidity and the 13 January 2011 press release on the loss absorbency of capital at the point of non-viability. To help ensure a consistent global implementation of Basel III, the Committee has agreed to periodically review frequently asked questions and publish answers along with any technical elaboration of the rules text and interpretative guidance that may be necessary.

This document sets out the first set of frequently asked questions that relate to the definition of capital sections of the Basel III rules text. The questions and answers are grouped according to the relevant paragraphs of the rules text. 

Contents Page
Paragraphs 52-53 (Criteria for Common Equity Tier 1) 1
Paragraphs 54-56 (Criteria for Additional Tier 1 capital)  2
Paragraphs 60-61 (Provisions) 3
Paragraphs 62-65 (Minority interest and other capital that is issued out of consolidated subsidiaries that is held by third parties) 3
Paragraphs 76-77 (Defined benefit pension fund assets and liabilities) 4
Paragraphs 79-85 (Investments in the capital of banking financial and insurance entities) 4
Paragraphs 94-96 (Transitional arrangements) 5
Press release 13 January 2011 (Loss absorbency at the point of non-viability)  8
General questions 9