INTM267754 | Foreign banks trading in the UK through permanent establishments: The approach in determining an adjustment to funding costs - STEP 2: Risk weighting the assets - the Basel II regulatory regime: End of the interim period

At the end of the interim period the latter two approaches described above will cease. At that point the branch would be required to show that it’s Tier 1 to total assets ratio is in line with that of similar UK banks. Other factors on which to base comparisons may also have been developed by that time.

Following the interim period we may make an enquiry if the results returned under the bank or its branch’s application of Basel II gives a result markedly lower than that returned by a similar UK resident bank. If the branch cannot demonstrate that its results are comparable to those of similar UK banks, or cannot give good reasons for divergence from the results of UK banks, we would expect to increase the capital attributed to the branch accordingly