5For the purposes of calculating capital adequacy, cannot exceed the value of Tier 1 capital.

5 For the purposes of calculating capital adequacy, cannot exceed the value of Tier 1 capital.

6 General provisions, less any associated future income tax benefit, up to a value of 1.25 per cent of total risk weighted assets. The provisions must be additional to the statutory provisions (Prudential Standard 3.3.2.a) and must be created against future, presently unidentified losses. General provision must be available to meet any losses that may subsequently materialise.

7 Where the regular periodic revaluation of property is reflected in the balance sheet and is subject to audit review, revaluation reserves are to be included in Upper Tier 2 capital after allowance for capital gains and any other taxes or costs that would be incurred should the asset be sold for the revalued amount. Regular periodic valuations must be at intervals of no more than 3 years. For revaluations of other assets (including securities) not passed through the profit and loss account and irregular revaluations of property, only 45 per cent of the gain may be included in Upper Tier 2 capital. However, the full value of any decline in value must be reflected in Upper Tier 2 capital. This applies whether revaluations or devaluations are recorded in the balance sheet or in the notes to the accounts.