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BIPRU 10.9 Wider Integrated Group

Application

BIPRU 10.9.1R

This section applies to a BIPRU firm if:

  1. (1)

    it has a wider integrated group waiver; and

  2. (2)

    it is a member of a UK integrated group and of a wider integrated group.

BIPRU 10.9.2R

If this section applies, BIPRU 10.8 (UK Integrated Groups) does not apply.

BIPRU 10.9.3R

If this section applies to a firm, it must apply it to all exposures to all its concentration risk group counterparties and not just some of them.

Guidance about wider integrated groups

BIPRU 10.9.4G

Guidance on the treatment of intra-group exposures under BIPRU 10 if this section applies can be found in BIPRU 10 Annex 1 G (Treatment of exposures under the integrated groups regime for concentration risk).

Definition of wider integrated group

BIPRU 10.9.5R

The wider integrated group of a firm consists of each concentration risk group counterparty of the firm that is not a member of the firm's UK integrated group but satisfies all the conditions for membership of the firm's UK integrated group except for BIPRU 10.8.4 R (4) (Establishment in the United Kingdom).

Definition of diverse block

BIPRU 10.9.6R

For the purposes of this section, and in relation to a firm and its wider integrated group, a diverse block means all undertakings in the wider integrated group designated as a single diverse block by the applicable wider integrated group permission.

Definition of residual block

BIPRU 10.9.7R

For the purposes of this section, and in relation to a firm and its wider integrated group, a member of the residual block means a concentration risk group counterparty of the firm which is not a member of the firm's UK integrated group or wider integrated group.

Revised concentration risk limits for a wider integrated group

BIPRU 10.9.8R

A firm to which this section applies must ensure that the rules listed in BIPRU 10.9.9 R are complied with on a consolidated basis on the following basis:

  1. (1)

    the rules apply in relation to the firm's UK integrated group rather than in relation to the firm;

  2. (2)

    the rules apply in relation to exposures of the members of the UK integrated group to members of each of the following:

    1. (a)

      each diverse block; and

    2. (b)

      the residual block; and

  3. (3)

    the UK integrated group, each diverse block and the residual block must each be treated as separate single undertakings.

BIPRU 10.9.9R

The rules referred to in BIPRU 10.9.8 R are:

  1. (1)

    BIPRU 10.5.6 R (25% non-trading book limit);

  2. (2)

    BIPRU 10.5.11 R (trading book limits) other than BIPRU 10.5.11 R (2) (CNCOM);

  3. (3)

    BIPRU 10.5.12 R (500% limit for trading book excess exposures) with the deletion of the time limit set out in BIPRU 10.5.12 R; and

  4. (4)

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

BIPRU 10.9.10G

Exposures between members of the UK integrated group are exempt if this section applies.

BIPRU 10.9.11G

The 800% limit in BIPRU 10.5.8 R and the 600% limit in BIPRU 10.5.13 R do not apply to exposures to concentration risk group counterparties if this section applies.

Adjustments to the Treasury concession and securities financing exemptions

BIPRU 10.9.12R

BIPRU 10.8.10 R (Adjustments to the Treasury concession exemption) and BIPRU 10.8.11 R (Adjustments to the exemption for securities financing transactions) apply for the purposes of this section in the same way that they apply for the purposes of BIPRU 10.8 (UK Integrated Groups).

Calculation of capital resources for a UK integrated group

BIPRU 10.9.13R

BIPRU 10.8.13 R (Calculation of capital resources for a UK integrated group) applies for the purposes of this section in the same way that it applies for the purposes of BIPRU 10.8 (UK Integrated Groups).

How diverse blocks are chosen

BIPRU 10.9.14G

As part of the process of applying for a wider integrated group waiver, a firm should agree with the FSA the number, nature and size of the diverse blocks. The basis of the diverse blocks will depend on the nature, scale and diversity of the business of the firm, its UK integrated group and its wider integrated group. The different diverse blocks are taken to reflect different groupings of risk, reflecting appropriately low levels of correlation. In general, the FSA will expect to permit a firm to establish no more than four diverse blocks. However, there may be circumstances in which the nature and scale of a firm, its UK integrated group and its wider integrated group would warrant the creation of additional diverse blocks. Each member of a firm's wider integrated group will be allocated to a diverse block. Blocks may be diverse according to geography, business or a combination of both.

Exemption for intra-group exposures on a solo basis

BIPRU 10.9.15R

If this section applies to a firm, then subject to BIPRU 10.10 (Treatment of the trading book concentration risk excess under the integrated groups regime), it may, on a solo basis, treat an exposure to a concentration risk group counterparty as exempt from the limits in BIPRU 10.5 (Limits on exposures and large exposures).

BIPRU 10.9.16G

The purpose of BIPRU 10.9.15 R is to reflect the fact that the limits in BIPRU 10.5 (Limits on exposures and large exposures) so far as they apply to concentration risk group counterparties are calculated on a consolidated basis with respect to a firm's UK integrated group. It is therefore necessary to switch them off on a purely solo basis.