[X1PART THREE U.K. CAPITAL REQUIREMENTS

TITLE II U.K. CAPITAL REQUIREMENTS FOR CREDIT RISK

CHAPTER 4 U.K. Credit risk mitigation

Section 3 U.K. Requirements

Sub-Section 1 U.K. Funded credit protection
Article 205 U.K. Requirements for on-balance sheet netting agreements other than master netting agreements referred to in Article 206

On-balance sheet netting agreements other than master netting agreements referred to in Article 206 shall qualify as an eligible form of credit risk mitigation where all the following conditions are met:

(a)

those agreements are legally effective and enforceable in all relevant jurisdictions, including in the event of the insolvency or bankruptcy of a counterparty;

(b)

institutions are able to determine at any time the assets and liabilities that are subject to those agreements;

(c)

institutions monitor and control the risks associated with the termination of the credit protection on an ongoing basis;

(d)

institutions monitor and control the relevant exposures on a net basis and do so on an ongoing basis.]

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