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Status: You are viewing the version of the handbook as on 2009-03-31.

BIPRU 10.1 Application and Purpose

Application

BIPRU 10.1.1 R

1This chapter applies to a BIPRU firm. It applies irrespective of whether the firm adopts the standardised approach or the IRB approach. If it adopts the IRB approach, it applies irrespective of whether the firm adopts the foundation IRB approach or the advanced IRB approach.

Purpose

BIPRU 10.1.2 G

This chapter sets out rules and guidance for large exposures and the concentration risk capital component (the CNCOM), implementing the large exposures requirements of articles 66(3) (in part) and 106 to 117 and paragraph 7 of Annex V of the Banking Consolidation Directive and articles 28 to 32 and Annex VI of the Capital Adequacy Directive.

BIPRU 10.1.3 G

A large exposure may be in the form of a loan to a single borrower, or it may arise across many transactions involving different types of financial instruments with several counterparties within the same group of companies. Where a firm's exposure to its counterparty is large, it risks a large loss should the counterparty default. Such a loss may be sufficient on its own to threaten the solvency of the firm.

BIPRU 10.1.4 G

The purpose of this chapter is to ensure that a firm manages its exposure to counterparties within appropriate limits set in relation to its capital resources.

Restricted application for UCITS investment firms

BIPRU 10.1.5 R

This chapter only applies to a UCITS investment firm with respect to its designated investment business. For this purpose scheme management activity is excluded from designated investment business.