Société Générale / Risk report 2021 - Pillar 3 2020

5 CAPITAL MANAGEMENT AND ADEQUACY REGULATORY CAPITAL | SOCIETE GENERALE GROUP | PILLAR 3 - 2021 51 The supervisory authority accepted that some Group entities may be exempted from the application of prudential requirements on an individual basis or, where applicable, on a sub-consolidated basis. Terms and conditions of waiver of requirements granted by supervisors include a commitment to provide these subsidiaries with the Group's support to ensure their overall solvency and liquidity, as well as a commitment to ensure that they are managed prudently according to the applicable banking regulations. The conditions for applying waivers regarding monitoring on an individual basis for a Parent Institution, as far as solvency and large exposure ratios are concerned, are defined by the CRR, which stipulates that two conditions have to be met: there is no significant obstacle, in law or in fact, current or p anticipated, to the prompt transfer of equity capital or the rapid repayment of liabilities to the Parent Institution in a Member State; the risk assessment, measurement and control procedures that are p useful for the purposes of supervision on a consolidated basis cover the Parent Institution in a Member State. Accordingly, for instance, Societe Generale SA is not subject to prudential requirements on an individual basis. Any transfer of equity or repayment of liabilities between the parent company and its entities is carried out in compliance with capital and liquidity requirements that are locally applicable. The outline of the differences in the scopes of consolidation (entity by entity) is available on the website www.societegenerale.com, section “Universal Registration Document, Pillar 3” This information corresponds to Table LI3 of EBA Guidelines (EBA/GL/2016/11). REGULATORY CAPITAL 5.4 Reported in accordance with International Financial Reporting Standards (IFRS), Societe Generale’s regulatory capital consists of the following components. Common Equity Tier 1 capital According to the applicable regulations, Common Equity Tier 1 capital is made up primarily of the following: ordinary shares (net of repurchased shares and treasury shares) and p related share premium accounts; retained earnings; p components of other comprehensive income; p other reserves; p minority interests limited by CRR/CRD4. p Deductions from Common Equity Tier 1 capital essentially involve the following: estimated dividend payments; p goodwill and intangible assets, net of associated deferred tax p liabilities; unrealised capital gains and losses on cash flow hedging; p income on own credit risk; p deferred tax assets on tax loss carryforwards; p deferred tax assets resulting from temporary differences beyond a p threshold; assets from defined benefit pension funds, net of deferred taxes; p any positive difference between expected losses on customer loans p and receivables managed under the internal ratings-based (IRB) approach, and the sum of related value adjustments and collective impairment losses; expected losses on equity portfolio exposures; p value adjustments resulting from the requirements of prudent p valuation; securitisation exposures weighted at 1,250%, when these positions p are excluded from the calculation of RWA. Additional Tier 1 capital According to CRR/CRD4 regulations, Additional Tier 1 capital is made up of deeply subordinated notes that are issued directly by the Bank, and have the following features: these instruments are perpetual and constitute unsecured, deeply p subordinated obligations. They rank junior to all other obligations of the Bank, including undated and dated subordinated debt, and senior only to common stock shareholders; Societe Generale may elect, on a discretionary basis, not to pay the p interest and coupons linked to these instruments. This compensation is paid out of distributable items; they include neither a step-up in compensation nor any other p incentive to redeem; they must have a loss-absorbing capacity; p they might be haircut or converted when in resolution or p independently of a resolution measurement; subject to the prior approval of the European Central Bank, Societe p Generale has the option to redeem these instruments at certain dates, but no earlier than five years after their issuance date. Deductions of Additional Tier 1 capital essentially apply to the following: AT1 hybrid treasury shares; p holding of AT1 hybrid shares issued by financial sector entities; p minority interests beyond the minimum T1 requirement in the p entities concerned.