If:

1. (1)

   a firm (firm A) is a member of a group;

2. (2)

   another member of that group (firm B) is a firm that is subject to BIPRU 81;

   1
3. (3)

   firm B is in firm A's immediate group; and

4. (4)

   firm A is included in the scope of the consolidation under BIPRU 81 as it applies to firm B;

   1

firm A must comply with BIPRU 8 as it applies to firm B except that the rules in BIPRU 8 relating to non-EEA sub-group do not apply.1

If:

1. (1)

   ELM 7.3.1 R does not apply to a firm;

2. (2)

   the firm is a member of an EEA consolidated group;

   1
3. (3)

   there is a full credit institution or an investment firm in that EEA consolidated group;1

   1
4. (4)

   the undertaking in (3) is in the firm's immediate group; and1

5. (5)

   that EEA consolidated group is not subject to supervision on a consolidated basis by a competent authority of another EEA State under the Banking Consolidation Directive, the E-Money Directive or the Capital Adequacy Directive;1

the firm must comply with BIPRU 8 with respect to that EEA consolidated group as follows:1

1. (6)

   BIPRU 8 applies as it does to a bank in a UKconsolidation group; and1

2. (7)

   the rules in BIPRU 8 relating to non-EEA sub-group do not apply.1

1If:

1. (1)

   ELM 7.3.1 R and ELM 7.3.2 R do not apply to a firm;

2. (2)

   the firm is a member of an UKconsolidated group;

3. (3)

   there is a full credit institution or an investment firm in that UKconsolidated group; and

4. (4)

   the undertaking in (3) is in the firm'simmediate group;

the firm must, at all times, maintain capital resources (calculated in accordance with the relevant rule) at a level that ensures that, taking into account (in the manner and to the extent provided for in that rule) the capital resources of other members of the firm'sgroup, the firm would comply with BIPRU 8 as it applies when there is a bank in the UK consolidation group if it applied to the firm. For the purposes of ELM 7.3.3 R, the rules in BIPRU 8 apply to the UK consolidated group in the same way as they apply to a UK consolidation group under BIPRU 8. The rules in BIPRU 8 relating to non-EEA sub-group do not apply.

If:

1. (1)

   ELM 7.3.1 R, ELM 7.3.2 R and ELM 7.3.2A R1 do not apply to a firm;

   1
2. (2)

   the firm is a member of an EEA consolidated group; and

3. (3)

   that EEA consolidated group is not subject to supervision on a consolidated basis by a competent authority of another EEA State under the Banking Consolidation Directive, the E-Money Directive or the Capital Adequacy Directive;

the firm must ensure that at all times its own funds are of such an amount that its EEAgroup riskown funds are equal to or exceed its EEAgroup riskown funds requirement.

If:

1. (1)

   ELM 7.3.1 R, ELM 7.3.2 R, ELM 7.3.2A R1 and ELM 7.3.3 R do not apply to a firm; and

2. (2)

   the firm is a member of a UK consolidated group;

the firm must ensure that at all times its own funds are of such an amount that its UK group riskown funds are equal to or exceed its UK group riskown funds requirement.

A firm's EEA consolidated group is the consolidated sub-group of the firm's EEA financial parent undertaking.

A firm has no EEA consolidated group if the firm would be its only member or if it has no EEA financial parent undertaking.

A firm's UK consolidated group is the consolidated sub-group of:

1. (1)

   the firm'sUK financial parent undertaking; or

2. (2)

   (if the firm has no UK financial parent undertaking and the firm is a UK domestic firm) the firm.

A firm has no UK consolidated group if the firm would be its only member.

A firm, having given prior notice to the FSA, may exclude from its EEA consolidated group or UK consolidated group for the purposes of this chapter:

1. (1)

   an undertaking, the total assets of which; or

2. (2)

   two or more undertakings, the total of whose assets added together;

are less than the smaller of 10 million euro and 1% of the total assets of the firm.

A firm's EEAgroup risk own funds are calculated as follows:

1. (1)

   the own funds of members of the EEA consolidated group are consolidated using the principles that apply to preparing consolidated accounts under the Companies Act 1985 where applicable, otherwise the Companies Act 2006,2 and in accordance with accounting principles generally accepted in the United Kingdom;

2. (2)

   for these purposes the own funds of a person to whom ELM 2.4.2 R does not apply are calculated as if it did apply;

3. (3)

   the adjustments provided for in article 651 of the Banking Consolidation Directive apply (if required by the Banking Consolidation Directive), in accordance with (1);

   1
4. (4)

   the deductions specified in ELM 2.4.2 R must be recalculated at the level of the EEA consolidated group;

5. (5)

   the deduction at stage (F) of the calculation in ELM 2.4.2 R does not apply to material holdings held by members of the EEA consolidated group in another member;

6. (6)

   the limits in ELM 2.4.18 R and ELM 2.4.19 R (Limits on components of own funds) must be applied;

7. (7)

   minority interests are not included; and

8. (8)

   own funds of members of the EEA consolidated group other than the person at its head are only included if they represent capital that is freely transferable to other members of the EEA consolidated group.

A firm's EEA group risk own funds requirement is calculated by way of consolidation using the principles that apply to preparing consolidated accounts under the Companies Act 1985 where applicable, otherwise the Companies Act 20062 as follows:

1. (1)

   the rules for calculating a firm's own funds requirement must be applied to the firm's EEA consolidated group as if it were a single firm subject to the ELM financial rules;

2. (2)

   the consolidation must be in accordance with accounting principles generally accepted in the United Kingdom.

All items included in the calculation of a firm's EEA group risk own funds and EEA group risk own funds requirement must be included in full, even though the member of the EEA consolidated group concerned is not a wholly owned subsidiary undertaking of the undertaking at the head of the EEA consolidated group.

A firm's EEA group risk own funds and EEA group risk own funds requirement must be calculated in a way that is not contrary to the Banking Consolidation Directive as applied by the E-Money Directive. The other rules in ELM 7.5 are subject to this rule.

A firm's UK group risk own funds and UK group risk own funds requirement are calculated in the same way as its EEA group risk own funds and EEA group risk own funds requirement except that references to its UK consolidated group are substituted for references to its EEA consolidated group.

If ELM 7.3.3 R applies to a firm, the firm must ensure that at all times its own funds are of such an amount that:

1. (1)

   no EEA group large exposure exceeds 25% of its EEA groupriskown funds;

2. (2)

   the total of its EEA group large exposures does not exceed 800% of its EEA groupriskown funds.

A firm's EEA group large exposures must be calculated as follows:

1. (1)

   the rules for calculating a firm's large e-money float exposures must be applied to the firm's EEA consolidated group as if it were a single firm subject to the ELM financial rules;

2. (2)

   the exclusions in ELM 3.5.6 R are applied at the level of the firm'sEEA consolidated group; and

3. (3)

   the consolidation must be in accordance with accounting principles generally accepted in the United Kingdom.

If ELM 7.3.4 R applies to a firm, the firm must ensure that at all times its own funds are of such an amount that:

1. (1)

   no UK grouplarge exposure exceeds 25% of its UK groupriskown funds;

2. (2)

   the total of its UK group large exposures does not exceed 800% of its UK group risk own funds.

A firm's UK group large exposure means the same thing as its EEA group large exposure except that references to members of its EEA consolidated group are replaced with references to its UK consolidated group.