Chargeable equity and liabilities: relevant foreign banks: attribution of chargeable equity and liabilities to a branch: determining 'C' the chargeable equity and liabilities of the UK branch (step 3)
Paragraph 27 of Schedule 19
The starting point for determining the chargeable equity and liabilities of the UK branch will be the equity and liabilities shown within the accounts of the foreign bank.
The equity and liabilities are determined as if they had been those recognised in accounts prepared under IAS or UK GAAP. If a foreign bank prepares accounts under another accounting standard, some adjustments will be required in order to bring the amounts of equity and liabilities in line with those that would have been recognised and measured under IAS or UK GAAP.
In determining the chargeable equity and liabilities of the branch the following adjustments can be made.
- Excluded equity and liabilities must be ignored (see BKLM330000).
- Liabilities, where permitted, can be netted (see BKLM350000).
- Any joint venture liabilities that have been subject to the bank levy elsewhere are removed (see BKLM323500).
- Equity and liabilities are reduced by the amount of any high quality liquid assets held (see BKLM360000).
- Liabilities to another relevant member, or that correspond to the assets of another UK branch within the same group, that is within the charge to the bank levy may be left out.
After making these adjustments the equity and liabilities that remain will be the chargeable equity and liabilities of the foreign bank which are described as ‘C’ in Step 3.
A proportion of the chargeable equity and liabilities of the foreign bank must then be allocated to the UK branch (Step 4, and Steps 5 and 6 (see BKLM375000)) to determine the proportions of long term equity and liabilities and short term liabilities.