UPRU 2.2 Method of calculation of financial resources

A firm must calculate its financial resources as shown below, subject to the detailed requirements set out in Part II.

Financial resources

Category

Part II

Para

(1)

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(2)

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(3)

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(4)

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(5)

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(6)

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(7)

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(8)

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1(8A)

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(9)

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(10)

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(11)

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(12)

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(13)

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(14)

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Own funds2

E

(15)

Illiquid assets

F

11

Financial resources = (E - F) =

G

PART II

DETAILED REQUIREMENTS

1

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2

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3

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4

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5

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6

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7

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8

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9

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10

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11

Illiquid assets (Item 15)

Illiquid assets comprise:

(a)

tangible fixed assets;

Note

In respect of tangible fixed assets purchased under finance leases the amount to be deducted as an illiquid asset shall be limited to the excess of the asset over the amount of the related liability shown on the balance sheet.

(b)

holdings in, including subordinated loans to, credit or financial institutions which may be included in the own funds of such institutions unless they have been deducted under item 9;

(c)

any investment in undertakings other than credit institutions and other financial institutions where such investments are not readily realisable;

(d)

any deficiency in net assets of a subsidiary;

(e)

deposits not available for repayment within 90 days or less (except for payments in connection with margined futures or options contracts);

Note

Where cash is placed on deposit with a maturity of more than 90 days but is repayable on demand subject to the payment of a penalty, then this is not required to be deducted as an illiquid asset but a deduction is required for the amount of the penalty.

(f)

loans, other debtors and accruals not falling due to be repaid within 90 days or which are more than one month overdue by reference to the contractual payment date;

(g)

physical stocks;

(h)

prepayments to the extent that the period of prepayment exceeds thirteen weeks; and

(i)

if not otherwise covered, any holding in eligible capital instruments of an insurance undertaking, insurance holding company, or reinsurance undertaking that is a subsidiary or participation. Eligible capital instruments include ordinary share capital, cumulative preference shares, perpetual securities and long-term subordinated loans, that are eligible for insurance undertakings under GENPRU 2 or, as the case may be, INSPRU 7.