The rules in GENPRU and BIPRU do not allow a firm that is a parent undertaking to incorporate the capital and requirements of a subsidiary undertaking in the calculation of that firm's capital resources and capital resources requirement. A firm that wishes to incorporate a subsidiary undertaking for this purpose should therefore apply for a solo consolidation waiver.
A firm that has a solo consolidation waiver must incorporate in the calculation of its requirements under the main BIPRU firm Pillar 1 rulesand BIPRU 10 (Large exposure requirements)2 each subsidiary undertaking to which the solo consolidation waiver applies. This does not apply to the base capital resources requirement.2
A firm that has a solo consolidation waiver must meet the obligations in SYSC 12.1.13 R (Application of certain systems and controls rules on a consolidated basis) on a consolidated basis with respect to the firm and each subsidiary undertaking to which the firm's solo consolidation waiver applies.
If (1) applies, SYSC 12.1.13 R applies to the group made up of the firm and its subsidiary undertakings referred to in (1) in the same way as it applies to a UK consolidation group or non-EEA sub-group.
A firm must treat itself and each subsidiary undertaking referred to in BIPRU 2.1.7 R as a single undertaking and must apply, on that basis, BIPRU 8 (Group risk - consolidation) to the group made up of the firm and such subsidiary undertakings in the same way as BIPRU 8 applies to a UK consolidation group or non-EEA sub-group.
A firm must apply BIPRU 10 (Large exposure requirements)2in accordance withBIPRU 8.9A (Consolidated large exposures requirements).2 Accordingly the firm must apply BIPRU 8.9A2 to the group made up of the firm and the subsidiary undertakings referred to in BIPRU 2.1.7 R in the same way as BIPRU 8.9A2 applies to a UK consolidation group or non-EEA sub-group.2222
A firm must be able to demonstrate fully to the FSA the circumstances and arrangements, including legal arrangements, by virtue of which there are no material practical or legal impediments, and none are foreseen, to the prompt transfer of the capital resources of the subsidiary undertaking referred to in BIPRU 2.1.19 R or repayment of liabilities when due by the subsidiary undertaking to the firm.
the speed with which funds can be transferred or liabilities repaid to the firm and the simplicity of the method for the transfer or repayment;
whether there are any interests other than those of the firm in the subsidiary undertaking and what impact those other interests may have on the firm's control over the subsidiary undertaking and on the ability of the firm to require a transfer of funds or repayment of liabilities;
whether there are any exchange controls that may have an impact on the transfer of funds or repayment of liabilities;
whether there are assets in the subsidiary undertaking available either to be transferred or liquidated for the purposes of the transfer of funds or repayment of liabilities;
whether any regulatory requirements impact on the ability of the subsidiary undertaking to transfer funds or repay liabilities promptly;
whether the purpose of the subsidiary undertaking prejudices the prompt transfer of funds or repayment of liabilities;
whether the legal structure of the subsidiary undertaking prejudices the prompt transfer of funds or repayment of liabilities;
whether the degree of solo consolidation by the firm undermines the FSA's ability to assess the soundness of the firm as a legal entity (taking into account any other subsidiary undertakings to which BIPRU 2.1 is being applied).
The effect of BIPRU 2.1.19 R is that even though a firm's solo consolidation waiver applies BIPRU 2.1 with respect to a subsidiary undertaking, the firm should not apply BIPRU 2.1 with respect to that subsidiary undertaking unless in addition it meets the conditions in BIPRU 2.1.20 R to BIPRU 2.1.24 R.