10.A transaction is deemed to fail the operational requirements for traditional or synthetic securitisations stated above in this Standard if the bank originates or sponsors a securitisation transaction that includes one or more revolving credit facilities, and the securitisation transaction incorporates an early amortization or similar provision that, if triggered, would:

1. i.Subordinate the bank’s senior or pari passu interest in the underlying revolving credit facilities to the interest of other investors;
2. ii.Subordinate the bank’s subordinated interest to an even greater degree relative to the interests of other parties;
3. iii.In other ways increases the bank’s exposure to losses associated with the underlying revolving credit facilities; or
4. iv.Not satisfy any conditions as set by the Central Bank after notification to banks pursuant to a circular or otherwise.

11.If a transaction contains one of the following examples of an early amortization provision but otherwise meets the operational requirements for traditional or synthetic securitisations stated above in this Standard, the originating bank may exclude the underlying exposures associated with such a transaction from the calculation of risk-weighted assets, but must still hold regulatory capital against any securitisation exposures they retain in connection with the transaction:

1. a.Replenishment structures where the underlying exposures do not revolve and early amortization terminates the ability of the bank to add new exposures;
2. b.Transactions with revolving credit facilities containing early amortization features that mimic term structures (i.e., where the risk on the underlying revolving credit facilities does not return to the originating bank) and where the early amortization provision does not effectively result in subordination of the originator’s interest;
3. c.Structures where a bank securitizes one or more revolving credit facilities and where investors remain fully exposed to future drawdowns by borrowers even after an early amortization event has occurred; or
4. d.The early amortization provision is triggered solely by events not related to the performance of the underlying assets or the selling bank, such as material changes in tax laws or regulations.