Section 628.23 - Limit on inclusion of third-party capital in total (tier 1 and tier 2) capitalThe combined amount of third-party capital instruments that a System institution may include in total (tier 1 and tier 2) capital is equal to the greater of the following:
(a) The then existing limit, if any; or(b) The lesser of: (1) Forty percent of total capital, calculated by taking two thirds of the average of the previous 4 quarters of total capital reported on the institution's Call Report filed with the FCA, less any amounts of third-party capital reported in total capital; or(2) The average of the previous 4 quarters of CET1 capital reported on its Call Report filed with the FCA.(c)Treatment of assets that are deducted. A System institution must exclude from total risk-weighted assets any item deducted from regulatory capital under this section.