As required by the rules of the FCA Sterling has undertaken an ‘Internal Capital Adequacy Assessment Process’ (“ICAAP”). The ICAAP is reviewed annually or whenever there is a material change to the business, whichever is sooner. The ICAAP process considered the risks that Sterling is exposed to and the controls that exist to mitigate those risks. It further considered whether additional capital was required to meet the risks that Sterling faces including, as required by the FCA rules, the potential cost of closing Sterling down in the unlikely event that such action was necessary. Sterling’s Pillar 1 capital requirement is the higher of the base capital requirement of EUR 50,000, the sum of the credit risk and market risk requirements and the fixed overhead requirement. Currently the fixed overhead requirement is the highest of these three requirements. Sterling has assessed its capital requirement under Pillar 2 at £682,000.