What is a business capital
Core capital consists only of capital components that are permanently available to the institute. The core capital is determined in accordance with Section 10 (2) KWG and is essentially based on the balance sheet equity, corrected for losses that have not yet been recognized in the balance sheet and items that only have a limited liability function in the event of insolvency (e.g. intangible assets).
Since core capital has the highest liability quality, it has the function of the assessment basis for all other capital of the own funds. Supplementary capital is only recognized up to a maximum of core capital. The maximum amount of third-tier funds that may be formed is in turn 2.5 times the free core capital (minus the free supplementary capital), i.e. the core capital that was not used to back risk positions in the banking book.
Part of the liable equity capital of a credit institution within the meaning of Section 10 of the German Banking Act. It consists primarily of the equity shown in the balance sheet. Free assets of the owner or the personally liable partners can be added, other items such as loans to partners, own shares and preference shares are deducted. Only if the core capital amounts to at least 4.4% of the risk-weighted assets, a credit institution may use revaluation reserves for the supplementary capital.
Also: hard equity, basic capital. Equity i. S. d. EU Capital Adequacy Directive and Section 10 KWG. Comprises according to KWG (minus certain deduction items): 1. Business capital and reserves paid into banks in the legal forms of the oHG and KG after deduction of the withdrawals by the owner or the personally liable partners and the loans granted to them as well as excess debts in the free assets of the Owner. 2. In the case of banks with the legal forms of AG, KGaA and GmbH paid-in capital or share capital without the shares that have a preference to be paid in the distribution of profits (preference shares) and reserves; in the case of KGaA, further contributions of the personally liable partners that have not been paid on the share capital, less the withdrawals of the personally liable partners and the loans granted to them. 3. In the case of banks in the legal form of a registered cooperative, business assets and reserves; Credit balances of comrades who leave at the end of the financial year and their claims to payment of a portion of the profit reserves of the cooperative bank shown separately in the balance sheet are to be deducted. 4. In the case of public savings banks and savings banks under private law that are recognized as public savings banks, the reserves. 5. Endowment capital paid in at other public-law credit institutions and the reserves. 6. Capital and reserves paid in at banks in other legal forms; 7. Special item for general banking risks according to § 340g HGB. 8. Certain capital contributions by silent partners. 9. Balance sheet profit, insofar as it has been decided to allocate it to business capital, reserves or business assets. If an institution creates interim financial statements that meet the requirements applicable to the annual financial statements, the interim financial statements apply to the assessment of own funds as the annual financial statements, with interim profits being added to core capital unless they are foreseen. Profit distributions or tax expenses are bound. Losses resulting from interim financial statements are to be deducted from core capital. An institution that assigns interim profits to core capital must prepare interim financial statements for at least 5 years in a row. If an institution abandons the process of preparing interim financial statements, interim profits may be added to core capital at the earliest, again after 5 years. The institute issued the interim financial statements BaFin and Bundesbank without to submit. The auditor issued the report on the audit of the interim financial statements (interim audit report) without to be submitted to BaFin and Bundesbank after completion of the examination. Annual financial statements drawn up during the course of a merger are not considered to be interim financial statements. Only the amounts shown as reserves in the last balance sheet for the end of a financial year are deemed to be reserves, with the exception of those liability items that are only taxable upon their dissolution. Amounts shown as reserves, which have been formed from income on which tax is only payable when a future event occurs, can only be taken into account up to 45%. Reserves that are built up on the basis of a premium achieved on the issue of units or otherwise through the inflow of external funds can be taken into account from the time of inflow.
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