Requirements for the capital adequacy of housing enterprises with savings facilities

(1) In the interest of fulfilling their obligations towards their creditors, in particular in the interest of the safety of the assets entrusted to them, housing enterprises with savings facilities must have adequate capital. The Federal Ministry of Finance is authorised to issue, by statutory instrument not requiring the consent of the Bundesrat, in consultation with the Deutsche Bundesbank, more detailed provisions on the adequate capital adequacy (solvency) of housing enterprises with savings facilities, in particular on
1. the determination of the transactions to be included for counterparty default risk and market risk and their risk parameters;
2. the subject matter and procedures for determining own funds requirements for operational risk;
3. the calculation methods for the own funds requirement and the technical principles required for it;
4. the content, type, scope, and form of the particulars required to demonstrate adequate capital adequacy, as well as provisions on the data carriers, transmission channels, and data formats permissible for data transmission, and
5. the requirements for a rating agency in order for its ratings to be recognised for risk-weighting purposes, and the requirements for the rating. The Federal Ministry of Finance may transfer the authorisation to the Federal Institute by statutory instrument, on the basis that the statutory instrument is issued in agreement with the Deutsche Bundesbank. Before the statutory instrument is issued, the umbrella association of housing enterprises with savings facilities is to be heard.
(2) In assessing the adequacy of the capital, the Federal Institute may order that a housing enterprise with a savings facility must comply with own funds requirements that go beyond the requirements of the statutory instrument under subsection (1), second sentence, in particular
1. to take account of risks that are not, or not fully, the subject of the statutory instrument under subsection (1), second sentence,
2. where the risk-bearing capacity of a housing enterprise with a savings facility is not ensured,
3. to have regard to a particular business situation of the housing enterprise with a savings facility, such as on commencing business activity, or
4. where the housing enterprise with a savings facility does not have a proper business organisation within the meaning of section 25a(1).
(3) On the application of the housing enterprise with a savings facility, the Federal Institute may, in assessing the adequacy of the capital, consent to a different calculation of the own funds requirements, in order to avoid an inappropriate representation of risk in an individual case.
(4) The calculation of the adequacy of the capital under the statutory instrument under subsection (1), second sentence, must be based on liable capital.
(5) Capital that is or was made available by third parties or by subsidiary undertakings of the housing enterprises with savings facilities may be taken into account only where it has actually accrued to the housing enterprise with a savings facility.
(6) Liable capital is deemed to be, less the items under the second sentence,
1. the members' capital contributions and the reserves; in this regard, the capital contributions of members leaving at the end of the financial year, and their entitlements to payment of a share in the cooperative's retained earnings reserve shown separately in the balance sheet by registered cooperatives under section 73(3) of the Cooperatives Act, are to be deducted, and
2. the balance sheet profit, insofar as its allocation to the reserves or the members' capital contributions has been resolved. The items to be deducted within the meaning of the first sentence are:
1. the balance sheet loss;
2. the intangible assets;
3. the correction item under subsection (9);
4. securitisation positions, insofar as the statutory instrument under subsection (1), second sentence, provides for a choice between backing the securitisation position with own funds to its full amount or deduction, and the housing enterprise with a savings facility chooses deduction.
(7) Only the amounts shown as reserves in the most recent balance sheet drawn up as at the end of a financial year are deemed reserves within the meaning of subsection (6), first sentence, with the exception of liability items that are taxable only on their release. Amounts shown as reserves that have been formed from income on which tax is payable only on the occurrence of a future event may be taken into account only up to 45 percent. Reserves formed on the basis of a premium achieved on the issue of shares, or otherwise through the inflow of external funds, may be taken into account from the time of the inflow.
(8) Interim financial statements drawn up by a housing enterprise with a savings facility must undergo a review by the auditor; in these cases, the interim financial statements are, for the purposes of this provision, deemed financial statements comparable to the annual financial statements, whereby profits from the interim financial statements are attributed to the capital insofar as they are not committed for anticipated profit distributions or tax expenses. Losses resulting from interim financial statements are to be deducted from the capital. The housing enterprise with a savings facility must submit the interim financial statements to the Federal Institute and the Deutsche Bundesbank without delay in each case. The auditor must submit a certificate on the review to the Federal Institute and the Deutsche Bundesbank without delay after completing the review of the interim financial statements. Annual financial statements prepared during the year in the course of a merger are not deemed interim financial statements within the meaning of this subsection.
(9) The Federal Institute may determine a correction item against the liable capital. Where the correction item is determined to take account of capital changes not yet reflected in the balance sheet, the determination becomes moot upon the adoption of the next annual financial statements drawn up as at the end of a financial year. The Federal Institute must, on the application of the housing enterprise with a savings facility, revoke the determination insofar as the condition for the determination ceases to apply.