1. Subject to paragraph 2, and only for the purpose of calculating net positions and own funds requirements in accordance with this Title on a consolidated basis, institutions may use positions in one institution or undertaking to offset positions in another institution or undertaking.
2. Institutions may apply paragraph 1 only with the permission of the competent authorities which shall be granted if all the following conditions are met:
(a) there is a satisfactory allocation of own funds within the group;
(b) the regulatory, legal or contractual framework in which the institutions operate guarantees mutual financial support within the group.
3. Where there are undertakings located in third countries, all the following conditions shall be met in addition to those set out in paragraph 2:
(a) such undertakings have been authorised in a third country and either satisfy the definition of a credit institution or are recognised third-country investment firms;
(b) on an individual basis, such undertakings comply with own funds requirements equivalent to those laid down in this Regulation;
(c) no regulations exist in the third countries in question which might significantly affect the transfer of funds within the group.