For the purposes of this Part, investment firms shall deduct amounts in excess of the limits specified in points (a) and (b) from the determination of Common Equity Tier 1 items referred to in Article 26 of Regulation (EU) No 575/2013: (a) a qualifying holding, the amount of which exceeds 15 % of the own funds of the investment firm calculated in accordance with Article 9 of this Regulation but without applying the deduction referred to in point (k)(i) of Article 36(1) of Regulation (EU) No 575/2013, in an undertaking which is not a financial sector entity; (b) the total amount of the qualifying holdings of an investment firm in undertakings other than financial sector entities that exceeds 60 % of its own funds calculated in accordance with Article 9 of this Regulation but without applying the deduction referred to in point (k)(i) of Article 36(1) of Regulation (EU) No 575/2013. From the wording of the article it seems that the total deduction equals the sum of: • the amount in excess of the 15% limit, • the amount in excess of the 60% limit. This however seems to have no rationale since it would mean that in some instances, the total deduction could be greater than the total investment made. For example: Own Funds without the deduction referred to in article 36(1)(k)(i) of the CRR = 100 Qualifying holding outside the financial sector = 100 a) Limit 15% = 15 Excess of 15% limit = 100 – 15 = 85 b) Limit 60% = 60 Excess of 60% limit = 100 – 60 = 40 According to article 10(1) of the IFR investment firms shall deduct amounts in excess of the limits specified in points (a) and (b), so in the example above this would mean: 85 + 40 = 125, which is higher than the qualifying holding (100). The above wording is also not in line with the current approach taken by the CRR. According to article 89(3)(a) of the CRR: for the purpose of calculating the capital requirement in accordance with Part Three, institutions shall apply a risk weight of 1250 % to the greater of the following: (i) the amount of qualifying holdings referred to in paragraph 1 in excess of 15 % of eligible capital; (ii) the total amount of qualifying holdings referred to in paragraph 2 that exceed 60 % of the eligible capital of the institution; According to article 90 of the CRR as an alternative to applying a 1250% weight, institutions may deduct the relevant amount of qualifying holdings from Common Equity Tier 1 items in accordance with point (k) of article 36(1). Article 36(1)(k)(i) of the CRR refers to the deduction of the exposure amount of the qualifying holdings outside the financial sector which qualify for the 1250% risk weight. Therefore the deduction under article 36(1)(k)(i) of the CRR is not the sum of, but the greater of: • the amount of qualifying holdings in excess of 15 % of eligible capital; • the total amount of qualifying holdings that exceed 60 % of the eligible capital of the institution. Since the CRR does not change with regard to the abovementioned provisions, the different approach taken by the IFR would mean unequal treatment of the qualifying holdings outside the financial sector for different categories of investment firms and has no economic rationale.