Article 5Deduction from profits of any foreseeable charge or dividend
1.
In order to demonstrate that any foreseeable charges or dividends have been deducted from the amount of profits, the credit institution shall:
(a)
provide a declaration that those profits have been recorded in accordance with the principles set out in the applicable accounting framework and that the scope of prudential consolidation is not materially wider than the scope of verification referred to in the external auditor's document referred to in Article 4; and
(b)
submit to the ECB a document signed by a qualified person detailing the main components of those interim or year-end profits, including deductions for any foreseeable charges or dividends.
2.
In those cases where interim or year-end profits are to be included on a consolidated or sub-consolidated basis, the requirements referred to in paragraph 1 shall be satisfied by the consolidating entity.
3.
The dividends to be deducted shall be the amount formally proposed or decided by the management body. If such formal proposal or decision has not yet been taken, the dividend to be deducted shall be the highest of the following:
(a)
the maximum dividend calculated in accordance with internal dividend policy;
(b)
the dividend calculated on the basis of the average pay-out ratio over the last three years;
(c)
the dividend calculated on the basis of the previous year's pay-out ratio.
4.
Any deduction of dividends based on an approach not listed in paragraph 3 shall not be covered by this Decision.
5.
For the purposes of paragraph 1(b), a qualified person means a person who has been duly authorised by the institution's management body to sign on its behalf.
6.
For the purposes of paragraph 1, institutions shall use the model letter in the Annex to this Decision.