Step 3: Calculate the worldwide capital amount

Step 3.1: Calculate the average value of the eligible tier 1 capital (within the meaning of the prudential standards) for the worldwide group of which the ADI is a member.

Insert this amount at F on Worksheet 26: outward investing entity (ADI)'s step 3.

This is the average value of eligible tier 1 capital (within the meaning of the prudential standards) of the worldwide group of which the ADI is a member. Tier 1 capital is also calculated in accordance with the prudential standards.

Step 3.2: Calculate the average value of the worldwide group's risk-weighted assets.

Insert this amount at G on Worksheet 26: Outward investing entity (ADI)'s step 3.

This is the average value of the worldwide group's risk-weighted assets. Risk-weighted assets are calculated in accordance with the prudential standards.

Step 3.3: Divide the amount at F by the amount at G.

Insert the result at H on Worksheet 26: Outward investing entity (ADI)'s step 3.

Dividing the worldwide group's tier 1 capital by the worldwide group's risk-weighted assets establishes the capital ratio of the worldwide group.

Step 3.4: Calculate the average value of the ADI's risk weighted assets that are not:

• attributable to the ADI's overseas permanent establishments
• assets that represent equity invested in controlled foreign entities; that is, amounts shown at B in Worksheet 26: outward investing entity (ADI)'s step 1
• assets in respect of which prudential capital deductions must be made, other than assets attributable to the ADI's overseas permanent establishments.

Insert the result at I on Worksheet 26: Outward investing entity (ADI)'s step 3.

This is the average value of the ADI's risk-weighted assets attributable to its Australian operations.

Step 3.5: Insert the result of step 3.3 (H) at J on Worksheet 26: Outward investing entity (ADI)'s step 3.

This is the same amount calculated in step 3.3.

Step 3.6: Multiply the amount at I by the amount at J.

Insert the result at K on Worksheet 26: Outward investing entity (ADI)'s step 3.

This applies the worldwide capital ratio to the ADI's Australian risk-weighted assets.

Step 3.7: Calculate the average value of all the tier 1 prudential capital deductions for that year, other than the value of tier 1 prudential capital deductions attributable to any of the ADI's overseas permanent establishments or controlled foreign entities for which the ADI is an Australian controller.

Insert the result at E on Worksheet 44: outward investing entity (ADI)'s step 3.

This is the average value of the ADI's tier 1 prudential capital deductions.

Tier 1 prudential capital deductions are amounts that must be deducted under the prudential standards when calculating eligible tier 1 capital. Prudential capital deductions are made in respect of assets like goodwill and intangibles.

Step 3.8: Calculate the ADI's worldwide capital amount by adding the amounts at K and E.

This is the ADI's worldwide capital amount.

Step 3.1: Worldwide group's average tier 1 capital

(F) _____________

Step 3.2: Worldwide group's average risk-weighted assets

(G) _____________

Step 3.3: F ÷ G

(H) _____________

Step 3.4: ADI's average risk-weighted assets attributable to its Australian operations

(I) _____________

Step 3.5: Transfer result from H 

(J) _____________

Step 3.6: I × J

(K) _____________

Step 3.7: ADI's average tier 1 prudential capital deductions

(E) _____________

Step 3.8: Worldwide capital amount (K + E)

= _____________