01 · Own funds, deductions & MREL

Tiering orders claims by when they absorb loss. CET1 absorbs while the bank operates — no coupon promise, no maturity, no incentive to redeem. AT1 is the bridge: perpetual, coupons fully discretionary (and non-cumulative), converting or writing down at a 5.125% CET1 trigger — designed to recapitalise a going concern without a court. T2 absorbs only in gone concern, hence the five-year amortisation as it approaches maturity: absorbency you are about to repay is not absorbency. Above it all sits the bail-in stack (TLAC/MREL): enough loss-absorbing liabilities pre-positioned that resolution recapitalises the bank from its own balance sheet.

Deductions remove assets that vanish exactly when needed: goodwill and intangibles have no liquidation value; DTAs on losses need future profits a failing bank will not have; own shares and cross-holdings are double-counted capital; the IRB shortfall marks under-provisioning. The threshold mechanics (10% / 17.65%) tolerate small financial-sector holdings and temporary-difference DTAs at a 250% weight rather than full deduction — a negotiated softening, not a principle.