Please refer to the BSD Circular No. 08 dated June 27, 2006 regarding implementation of Basel II in Pakistan.

2. It has been decided that the book value of other intangible assets including software, brand value etc. in addition to goodwill, will also be deducted from Tier-1 capital when arriving at the eligible regulatory capital for the purpose of calculating Minimum Capital Requirements.

3. Accordingly, section 1.3.5 “Capital Deductions” of the detailed instructions stands amended as in Annexure-A. Moreover, for reporting purposes, the head 1.8 “Book value of Goodwill” in the CAP-1 sheet of the MCR reporting format for Basel II Standardized Approach as issued vide BSD Circular No. 2 dated March 26, 2007 is replaced with “Book value of Goodwill and Intangibles”

4. All other instructions on the subject shall, however, remain the same.

Please acknowledge receipt.

Encl: Annexure-A