BIPRU TP 33 Intra-group exposures: Transitional provisions for core UK group and large exposures

1Application

33.1

R

(1)

This section applies to a BIPRU firm that on 30 December 2010 was applying any of the exemptions under the following provisions in the version in force on that date:

(a)

BIPRU 3.2.25 R (Zero risk-weighting for intra-group exposures);

(b)

BIPRU 10.6.5 R to BIPRU 10.6.7 R (Parental guarantees and capital maintenance arrangements);

(c)

BIPRU 10.7 (Treasury concession and intra-group securities financing transactions);

(d)

BIPRU 10.8 (UK integrated group); or

(e)

BIPRU 10.9 (Wider integrated group), if it has a wider integrated group waiver that expires after 31 December 2010.

(2)

In order to continue applying any of the exemptions in (1), a firm must be able on an ongoing basis to demonstrate to the FSA that it continues to comply fully with the provisions applicable to that exemption.

Duration of transitional

33.2

R

This section applies until 31 December 2012.

Zero risk-weighting for intra-group exposures

33.3

R

A firm may assign a risk weight of 0% to exposures that are eligible for that treatment under the criteria in BIPRU 3.2.25 R in the version in force on 30 December 2010.

Exemptions from large exposures limits for intra-group exposures

33.4

R

A firm may, to the extent permitted by this section, treat an exposure to a concentration risk group counterparty as exempt or partially exempt in accordance with BIPRU 10 (Concentration risk requirements) in the version in force on 30 December 2010.

33.5

G

The term concentration risk group counterparty broadly covers group members if they and the firm are subject to consolidated supervision by the FSA, another EEA competent authority or certain non-EEA regulators. The full definition can be found in the Glossary in the version in force on 30 December 2010.

33.6

G

If the context requires, BIPRU 8.9 (Consolidated concentration risk requirements) as it was in force on 30 December 2010 continues to apply to a firm that applies BIPRU TP 33.4 R.

Effect of this section on intra-group exemptions in BIPRU 10

33.7

R

If a firm applies this section, BIPRU 10.8A (Intra-group exposures: core UK group) to BIPRU 10.9A (Intra-group exposures: exposures outside of the core UK group) do not apply.

33.8

G

The effect of BIPRU TP 33.7 is that a firm should not apply BIPRU 10.8A (Intra-group exposures: core UK group) to BIPRU 10.9A (Intra-group exposures: exposures outside the core UK group) to some exposures to core concentration risk group counterparties, non-core concentration risk group counterparties or connected counterparties and this section to others. The purpose of BIPRU TP 33.7 R is that a firm should choose between treating intra-group exposures under BIPRU 10.8A (Intra-group exposures: core UK group) to BIPRU 10.9A (Intra-group exposures: exposures outside the core UK group) and treating them under this section but that it should not mix the approaches.

Notice to the FSA

33.9

R

A firm may only apply the treatment in BIPRU TP 33.3 R or BIPRU TP 33.4 R if the firm has notified the FSA in writing that it intends to apply the relevant rule to the particular counterparty or concentration risk group counterparty respectively.

33.10

R

The notice in BIPRU TP 33.9 R must comply with the following requirements:

(1)

the FSA was notified on or before 31 December 2010;

(2)

the notice must give the following:

(a)

in the case of the treatment in BIPRU TP 33.3 R:

(i) the name of the counterparty concerned; and

(ii) details of the firm's initial plans on how and when it will ensure that exposures that will not be within its core UK group are treated in accordance with the relevant rules in BIPRU 3;

(b)

in the case of the treatment in BIPRU TP 33.4 R:

(i) the name of the concentration risk group counterparty concerned and the intra-group exemption or exemptions that apply to it; and

(ii) details of the firm's initial plans on how and when it intends to comply with the large exposures limits that apply to a core UK group or non-core large exposures group.