CHAPTER III

CRITERIA RELATING TO THE DETERMINATION OF CRITICAL FUNCTIONS AND CORE BUSINESS LINES

Criteria relating to the determination of core business lines
Article 7
1
Business lines and associated services which represent material sources of revenue, profit or franchise value for an institution or for a group of which an institution forms part shall be considered core business lines.
2
Core business lines shall be identified on the basis of an institution's internal organisation, its corporate strategy and how much those core business lines contribute to the financial results of the institution. Indicators of core business lines include, but are not limited to, the following:
a
revenues generated by the core business line as percentage of overall revenues;
b
profit generated by the core business line as percentage of overall profit;
c
return on capital or assets;
d
total assets, revenue and earnings;
e
the customer base, geographic footprint, brand and operational synergies of the business with other group businesses;
f
impact of ceasing the core business line on costs and earnings, where it is a source of funding or liquidity;
g
the growth outlook of the core business line;
h
the attractiveness of the business to competitors as a potential acquisition;
i
market potential and franchise value.
Future expected revenues, growth outlooks and franchise value may be considered in the identification of a core business line where they are supported by plausible, evidenced projections setting out the assumptions on which they are based.
3
Core business lines may rely on activities which do not by themselves generate direct profit for the institution, but which support core business lines of the institution thereby contributing indirectly to the institution's profits.