Related provisions for BIPRU 8.7.39
1 - 16 of 16 items.
The calculation of the consolidated capital resources requirement of a firm's UK consolidation group or non-EEA sub-group involves taking the individual components that make up the capital resources requirement on a solo basis and applying them on a consolidated basis. Those components are the capital charge for credit risk (the credit risk capital requirement), the capital charge for market risk (the market risk capital requirement)4 and the fixed overheads requirement.
In general a firm should calculate each consolidated requirement component using the appropriate regulator'srules, even in the case of group members who are subject to the capital requirements of an overseas regulator. However this section sets out certain circumstances in which a firm may use the capital requirements of an overseas regulator.
BIPRU 8.8 (Advanced prudential calculation approaches) says that a firm should not apply an advanced prudential calculation approach on a consolidated basis unless the advanced prudential calculation approach permission allowing the firm to use the advanced prudential calculation approach specifically allows it to be used on consolidated basis.
A firm may make the choice between an aggregation and a line by line approach differently for each consolidated requirement component. So for example a firm may decide to calculate the consolidated market risk requirement on an aggregation basis and the consolidated fixed overheads requirement on a line by line basis.
A firm must calculate the consolidated capital resources requirement of its UK consolidation group or non-EEA sub-group as the higher of the following consolidated requirements components:33(1) the sum of the consolidated credit risk requirement and the consolidated market risk requirement; and3(2) the consolidated fixed overheads requirement. 3
A firm must calculate a consolidated requirement component by applying the risk capital requirement applicable to that consolidated requirement component to the UK consolidation group or non-EEA sub-group in accordance with BIPRU 8.7.13 R. Except where BIPRU 8.7.34 R to BIPRU 8.7.38 R allow the requirements of another regulator to be used, the risk capital requirement must be calculated in accordance with the appropriate regulator'srules. The risk capital requirement applicable
Table: Capital charges relating to consolidated requirement components
This table belongs to BIPRU 8.7.11 R
Rules on which the consolidated requirement component are based (the applicable risk capital requirement) |
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(1) A firm must calculate a consolidated requirement component by using one of the methods in this rule.(2) Under the first method a firm must:(a) apply the risk capital requirement set out in BIPRU 8.7.12 R to each undertaking in the UK consolidation group or non-EEA sub-group; and(b) add the risk capital requirements together.(3) Under the second method a firm must:(a) treat the whole UK consolidation group or non-EEA sub-group as a single undertaking; and(b) apply the risk
A firm must notify the appropriate regulator which method under BIPRU 8.7.13 R it applies for which consolidated requirement component and to which parts of the UK consolidation group or non-EEA sub-group it is applying an aggregation approach and to which parts it is applying an accounting consolidation approach.
A firm may not apply the second method in BIPRU 8.7.13R (3) (accounting consolidation for the whole group) or apply accounting consolidation to parts of its UK consolidation group or non-EEA sub-group under method three as described in BIPRU 8.7.13R (4)(a) for the purposes of the calculation of the consolidated market risk requirement unless the group or sub-group and the undertakings in that group or sub-group satisfy the conditions in this rule. Instead the firm must use the
BIPRU 8.7.21 R to BIPRU 8.7.26 R are generally examples of the application of the general principles in BIPRU 8.2.1 R (Main consolidation rule for UK consolidation groups) and BIPRU 8.3.1 R (Main consolidation rule for non-EEA sub-groups). BIPRU 8.7.20 R and BIPRU 8.7.25 R are exceptions to those principles.
(1) This rule applies if:(a) a firm is applying an accounting consolidation approach to part of its UK consolidation group or non-EEA sub-group under method three as described in BIPRU 8.7.13R (4)(a); and(b) the part of the group in (a) constitutes the whole of a group subject to the consolidated capital requirements of a competent authority under the CRD implementation measures relating to consolidation under the Banking Consolidation Directive or the Capital Adequacy Directive.(2)
A firm that is a subsidiary must apply this chapter on a sub-consolidated basis if the firm, or the parent undertaking where it is a financial holding company or mixed financial holding company, have an institution or financial institution as a subsidiary in a third country or hold a participation in such an institution or financial institution. [Note: articles 129(1) (part) and 130(1) (part) of CRD]
If this chapter applies to a firm on a consolidated basis on a sub-consolidated basis, the firm must carry out consolidation to the extent and in the manner prescribed in Part One, Title II, Chapter 2, Section 2 (Methods for prudential consolidation) and Section 3 (Scope of prudential consolidation) of the EU CRR and IFPRU 8.1 (Prudential consolidation).
(1) In carrying out the calculations for the purposes of Part One, Title II, Chapter 2 of the EU CRR (Prudential consolidation), a firm must include the relevant proportion of an undertaking with whom it has:(a) a consolidation Article 12(1) relationship; or(b) an article 18(6) relationship. (2) In (1), the relevant proportion is such proportion (if any) as stated in a requirement imposed on the firm.[Note: article 18(3) and (6) of the EU CRR]
In carrying out the calculations for the purposes of Part One, Title II, Chapter 2 of the EU CRR (Prudential consolidation), a firm (for whom the FCA is the consolidating supervisor) must include the proportion according to the share of capital held of participations in institutions and financial institutions managed by an undertaking included in the consolidation together with one or more undertakings not included in the consolidation, where those undertakings' liability is limited
In carrying out the calculations for the purposes of Part One, Title II, Chapter 2 of the EU CRR (Prudential consolidation), a firm (for whom the FCA is the consolidating supervisor) must carry out a full consolidation of any undertaking with whom it has an article 18(5) relationship.[Note: article 18(5) of the EU CRR]
The FCA will assess applications to exclude entities from the scope of prudential consolidation against article 19(2) of the EU CRR on a case-by-case basis. The FCA will only grant this treatment with respect to undertakings where one of the conditions in article 19(2) is met. The FCA will still make a judgement as to whether it is appropriate to grant this treatment even where one of the conditions in article 19(2) is met.
Article 19(2) of the EU CRR allows the consolidating supervisor to decide in the following cases that an institution, financial institution or ancillary servicesundertaking which is a subsidiary or in which a participation is held need not be included in the consolidation in the following cases:(1) where the undertaking concerned is situated in a third country where there are legal impediments to the transfer of necessary information;(2) where the undertaking concerned is of negligible
Subject to rule 14.1.2, consolidated supervision and this chapter apply to a firm which is a member of a group if: (1) It is: (a) a securities and futures
firm, subject to the financial rules in Chapter 3, which is a broad scope firm but not a venture capital firm; and (b) [deleted](c) [deleted](2) It is neither a BIPRUfirm nor an IFPRUinvestment
firm.
(3) [Deleted](4) [Deleted](5) [Deleted]
A firm is not subject to consolidated supervision under the rules in this Chapter where any of the following conditions are fulfilled: (1) the firm is included in the supervision on a consolidated basis of the group of which it is a member by a competent authority other than the FCA; or (2) the firm is a member of a UK consolidation group already included in the supervision on a consolidated basis of the group of which it is a member by the FCA under BIPRU 8; or (3) the firm
A firm need not meet the requirements in rules 14.3.1 and 14.3.2 if: (1) there is no credit
institution in the group;
(2) no firm in the group
deals in investments as principal, except where it is dealing solely as a result of its activity of operating a collective investment
scheme, or where the firm's positions fulfil the CAD Article 5 exempting criteria; (3) [Deleted](4) the firm notifies
(1) This rule relates to the assessment of the amounts, types and distribution of financial resources, capital resources and internal capital (referred to in this rule as "resources") under the overall Pillar 2 rule as applied on a consolidated basis and to the assessment of diversification effects as referred to in GENPRU 1.2.37R (2) as applied on a consolidated basis.(2) A firm must be able to explain how it has aggregated the risks referred to in the overall Pillar 2 rule and
(1) A firm must allocate the total amount of financial resources, capital resources and internal capital identified as necessary under the overall Pillar 2 rule (as applied on a consolidated basis) between different parts of the relevant group (as defined in GENPRU 1.2.49 R). GENPRU 1.2.36 R (Identifying different tiers of capital) does not apply to this allocation.(2) The firm must carry out the allocation in (1) in a way that adequately reflects the nature, level and distribution
A firm must also allocate the total amount of financial resources, capital resources and internal capital (referred to in this rule as "resources") identified as necessary under the overall Pillar 2 rule as applied on a consolidated basis between each firm which is a member of the relevant group (as defined in GENPRU 1.2.49 R) on the following basis:(1) the amount allocated to each firm must be decided on the basis of the principles in GENPRU 1.2.52R (2); and(2) if the process
A firm to which the ICAAP rules apply on a consolidated basis need not prepare a consolidated basis assessment if such an assessment has been prepared by another member of its group. Where that is the case, a firm may adopt such an assessment as its own. A firm nevertheless remains responsible for the assessment.
(1) When the overall financial adequacy rule applies on a consolidated basis, the firm must ensure that at all times its group maintains overall financial resources, including capital resources and liquidity resources, which are adequate, both as to amount and quality, to ensure that there is no significant risk that the liabilities of any members of its group cannot be met as they fall due.(2) The group referred to in (1) is the relevant group as defined in GENPRU 1.2.49 R.(3)
IFPRU 11 applies to:(1) an IFPRU 730k firm that is not subject to supervision on a consolidated basis; (2) a firm that is an RRD group member; (3) a qualifying parent undertaking that is an RRD group member; and(4) a qualifying parent undertaking that is a mixed activity holding company of an IFPRU 730k firm.
The table below summarises whether a section of IFPRU 11 applies to a firm or qualifying parent undertaking:
(1) IFPRU 730k firm that is not subject to supervision on a consolidated basis |
(2) firm or qualifying parent undertaking that is the EEA parent undertaking of an RRD group |
(3) specific application to an IFPRU 730k firm that is a subsidiary of an EEA parent undertaking in another EEA State (note 1) |
(4) firm or qualifying parent undertaking that is a subsidiary of an EEA parent undertaking of an RRD group |
(5) qualifying parent undertaking that is a mixed activity holding company of an IFPRU 730k firm |
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IFPRU 11.1 (Application and purpose) |
Yes |
Yes |
No |
Yes |
Yes |
IFPRU 11.2 (Individual recovery plans) |
Yes |
No |
No |
No |
No |
IFPRU 11.3 (Group recovery plans) |
No |
Yes |
Yes |
No |
No |
IFPRU 11.4 (Information for resolution plans) |
Yes |
Yes |
Yes |
No |
No |
IFPRU 11.5 (Intra-group financial support) |
No |
Yes |
Yes - IFPRU 11.5.7 R only |
Yes |
Yes (note 2) |
IFPRU 11.6 (Contractual recognition of bail-in) |
Yes |
Yes |
No |
Yes |
Yes (note 3) |
IFPRU 11.7 (Notifications) |
Yes |
Yes |
No |
Yes |
Yes |
Note 1: IFPRU 11.3.1R (3) and IFPRU 11.4.1R (4) more fully describe this type of firm. Where specific application is not provided for this type of firm, the application is explained by (4). |
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Note 2: IFPRU 11.5 only applies to mixed activity holding companies of an IFPRU 730k firm in an RRD group. |
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Note 3: IFPRU 11.6 only applies to mixed activity holding companies that do not hold an RRD institution using an intermediate financial holding company or mixed financial holding company. |
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Where a firm is a member of a group, it should base its ICAAP on the consolidated financial position of the group. The group assessment should include information on diversification benefits and transferability of resources between members of the group and an apportionment of the capital required by the group as a whole to the firm (GENPRU 1.2.44 G to GENPRU 1.2.56 G (Application of GENPRU 1.2 on a solo and consolidated basis: Processes and tests)). A firm may, instead of preparing
If BIPRU 2.2.41 R applies to a firm on a consolidated basis the following adjustments are made to BIPRU 2.2.41 R in accordance with the general principles of BIPRU 8 (Group risk - consolidation):(1) references to capital resources are to the consolidated capital resources of the firm'sUK consolidation group or, as the case may be, its non-EEA sub-group; and(2) references to the capital requirements in GENPRU 2.1 (Calculation of capital resources requirements) are to the consolidated
Financial information, as set out in this section, must be included by a listed company in a class 1 circular if:(1) the listed company is seeking to acquire an interest in a target which will result in a consolidation of the target's assets and liabilities with those of the listed company; or(2) the listed company is seeking to dispose of an interest in a target which will result in the assets and liabilities which are the subject of the disposal2 no longer being consolidated;
2When a listed company is acquiring or disposing of an interest in a target that was or will be accounted for using the equity method in the listed company's annual consolidated accounts, the class 1 circular should include:(1) for an acquisition,(a) a narrative explanation of the proposed accounting treatment of the target in the issuer's next audited consolidated accounts; (b) a financial information table for the target; (c) a statement that the target financial information
(1) 2In the case of a class 1 disposal, a financial information table must include for the target:(a) the last annual consolidated balance sheet; (b) the consolidated income statements for the last three years drawn up to at least the level of profit or loss for the period; and(c) the consolidated balance sheet and consolidated income statement (drawn up to at least the level of profit or loss for the period) at the issuer's interim balance sheet date if the issuer has published
The requirements and guidance in this section are drafted so as to apply to a firm on a solo basis. As noted in GENPRU 1.2.17 G, however, in some cases the requirements in GENPRU 1.2 apply on a consolidated basis. In these cases, a firm should read and apply this section making appropriate adjustments to reflect the application of the GENPRU 1.2 requirements on a consolidated basis.
If the Part 4A permission of a firm contains a requirement obliging it to comply with this rule with respect to a third-country banking and investment group of which it is a member, it must comply, with respect to that third-country banking and investment group, with the rules in Part 2 of GENPRU 3 Annex 2, as adjusted by Part 3 of that annex.
When the overall financial adequacy rule applies on a consolidated basis or sub-consolidated basis, the firm must ensure that at all times its FCA consolidation group maintains overall financial resources and internal capital, including own funds and liquidity resources, which are adequate, both as to amount and quality, to ensure that there is no significant risk that the liabilities of any members of its FCA consolidation group cannot be met as they fall due.
If IFPRU 2.3.50 Rapplies to a firm on a consolidated basis, the following adjustments are made to IFPRU 2.3.50 R in accordance with the general principles of Part One, Title II, Chapter 2 of the EU CRR (Prudential consolidation): (1) references to own funds are to the consolidated own funds of the firm's FCA consolidation group or, as the case may be, its non-EEA sub-group; and(2) references to the capital requirements in Part Three of the EU CRR (Capital requirements) are to
The alternative calculation in GENPRU 2.2.239R (3) to (4) is only relevant to BIPRU 11 (Pillar 3 disclosures) and certain reporting requirements under SUP. However the deduction of material holdings at Part 2 of stage E of the capital resources table in the case of a BIPRU firm16 with an investment firm consolidation waiver has effect for all purposes.16