A set of adjustments that are made to a bank’s regulatory capital (e.g., CET-1 capital) to account for the effect of certain items not related to its core capital. These adjustments are made in order to produce more effective capital buffers. Regulatory adjustments generally take the form of deductions as well as recognition or derecognition of items in the calculation of a bank’s capital.

Regulatory adjustments include excess minority interest equity attributable to third-party owners, intangible assets, material holdings, and adjustments for prudential filters. Specific examples of regulatory adjustments are prudential valuation adjustments, goodwill net of deferred tax liabilities, gains on sale related to asset securitization, direct or indirect holding in own ordinary shares, etc.)

Other adjustments are cash flow hedge reserve, cumulative gains and losses due to changes in own credit risk on fair valued financial liabilities, defined benefit pension fund assets and liabilities, investments in own shares, or treasury stock, reciprocal cross holdings in the capital of banking, financial and insurance entities, investments in the capital of banking, financial and insurance entities, that are outside the scope of regulatory consolidation and where the bank does not own more than 10% of the issued common share capital of the entity, significant investments in capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, and threshold deductions.