Eligible capital under Art. 4(1)(71)(a) consists of "(i) Tier 1 capital as referred to in Article 25, without applying the deduction in Article 36(1)(k)(i); (iii) Tier 2 capital as referred to in Article 71 that is equal to or less than on third of Tier 1 capital as calculated pursuant to point (i) of this point" (Art. 4(1)(71)(a) CRR) Eligible capital under Art. (4)(1)(71)(b), however, consists of "(i) Tier 1 capital as referred to in Article 25; (ii) Tier 2 capital as referred to in Article 71 that is equal to or less than one third of Tier 1 capital" (Art. 4(1)(71)(b) CRR) The difference between the two definitions is the sum of the deductions under Art. 36(1)(k)(i) CRR and the respective amount of Tier 2 capital (i.e., up to one third of the deduction under Art. 36(1)(k)(i) CRR). To make the formal relationship between the two definitions more precise, the following equations hold: Define: Eligible capital under Art. 4(1)(71)(a) := ECA Eligible capital under Art. 4(1)(71)(b) := ECB Deductions under Art. 36(1)(k)(i) := D36_1_k_i Tier 1 capital := T1 Tier 2 capital := T2 Then it holds true that: ECA = ECB + AP36_1_k_i + min{1/3*AP36_1_k_i, max{0, T2 – 1/3*T1}} To illustrate this equation, consider the following example: T1 = 30 T2 = 11 AP36_1_k_i = 6 Then it follows that ECB = 30 + 1/3*30 = 40 while ECA = 30 + 6 + min{(30+6)*1/3; 11} = 30 + 6 + 11 = 47 Put differently, it holds that ECA = ECB + AP36_1_k_i + min{1/3*AP36_1_k_i, max{0, T2 – 1/3*T1}} = 40 + 6 + min{2; max{0; 11 – 10}} = 46 + min{2; 1} = 46 + 1 = 47 One easily observes that the two versions of "eligible capital" differ substantially.