On-balance sheet netting

1. An ADI may only use the net exposures of loans and deposits as the basis for its RWA calculation where it:
   1. has a well-founded basis for concluding that the netting or offsetting agreement is legally enforceable in each relevant jurisdiction regardless of whether the counterparty is insolvent or bankrupt;
   2. is able at any time to determine those loans and deposits with the same counterparty that are subject to the netting agreement, and the deposits meet the criteria for eligible financial collateral;
   3. monitors and controls its roll-off risks; and
   4. monitors and controls the exposures on a net basis.
2. Where all of the conditions in paragraph 7 of this Attachment are satisfied, an ADI may net loans and deposits to calculate RWA by applying the relevant requirements under either the simple or comprehensive approach as set out in Attachment G to this Prudential Standard. For this purpose, loans must be treated as exposures and deposits must be treated as eligible financial collateral.