GENPRU TP 8 Miscellaneous capital resources definitions for BIPRU firms

1Application

8.1

[FCA]

R

This section applies to a BIPRU firm.

8.2

[FCA]

R

Any provision of this section that applies on a consolidated basis under GENPRU TP 8.3R applies to any firm to which BIPRU 8 (Group risk - consolidation) applies.

Consolidation

8.3

[FCA]

R

A provision of this section applies on a consolidated basis for the purpose of BIPRU 8 (Group risk -consolidation) to the extent that, and in the same way that, the provision in BIPRU to which it relates applies on a consolidated basis.

(2)

the building society issued it before 18 November 2004; and

Preference shares

8.7

[FCA]

R

A BIPRU firm4 may treat a preference share as eligible for inclusion within stage B of the capital resources table (Perpetual non-cumulative preference shares) if it would not otherwise be eligible if:

4

(1)

on 31 December 2006 the firm was subject to IPRU(INV);

4

(2)

the firm issued it on or before 31 December 2006;

(3)

as at 31 December 2006 the firm included it, and was entitled to include it, in the calculation of its capital resources under IPRU(INV) as capital of a type that corresponded to tier one capital resources;

4

(4)

it would have been eligible for inclusion within stage B of the capital resources table except for the fact that it does not meet GENPRU 2.2.64 R (4)(b) (Restrictions on mandatory coupons for tier one capital) or GENPRU 2.2.109 R (1) (Restrictions on mandatory coupons for perpetual non-cumulative preference shares) or both of those rules;

(5)

the only reason that it does not meet GENPRU 2.2.64 R (4)(b) or GENPRU 2.2.109 R (1) is because a mandatory cash coupon is payable;

(6)

the firm has the right not to pay the cash coupon if it is in breach of any of the main BIPRU firm Pillar 1 rules or to the extent that paying such coupon would result in a breach of any of those rules; and

(7)

any amount not paid under (6) does not accumulate.

Upper tier 2 instruments: Deferral of interest

8.9

[FCA]

R

A BIPRU firm4 may treat a capital instrument as eligible for inclusion within stage G of the capital resources table (Upper tier two capital) if it would not otherwise be eligible if:

4

(1)

on 31 December 2006 the firm was subject to IPRU(INV);

4

(2)

the firm issued it on or before 31 December 2006;

(3)

as at 31 December 2006 the firm included it, and was entitled to include it, in the calculation of its capital resources under IPRU(INV) as capital of a type that corresponded to upper tier two capital resources;

4

(4)

it would have been eligible for inclusion within stage G of the capital resources table except for the fact that it does not meet GENPRU 2.2.177 R (2);

(5)

the only reason that it does not meet GENPRU 2.2.177 R (2) is because a mandatory cash coupon is payable; and3

(6)

the firm has the right not to pay the cash coupon if it is in breach of any of the main BIPRU firm Pillar 1 rules or to the extent that paying such coupon would result in a breach of any of those rules.3

3

Conversion ratio

8.11

[FCA]

R

GENPRU 2.2.138 R (2) (Tier one capital: Conversion ratio) does not apply to a capital instrument issued by a firm if:

(1)

on 31 December 2006 the firm was subject to IPRU(INV);

4

(2)

the firm issued it on or before 31 December 2006; and

(3)

as at 31 December 2006 the firm included it, and was entitled to include it, in the calculation of its capital resources under:

(a)

[deleted]4

4

(b)

IPRU(INV) as capital of a type that corresponded to tier one capital.

4

Legal opinions

8.12

[FCA]

R

GENPRU 2.2.118 R (Legal opinions for innovative tier one capital) does not apply to a capital instrument issued by a firm if:

(1)

on 31 December 2006 the firm was subject to IPRU(INV);

4

(2)

the firm issued the capital instrument on or before 31 December 2006; and4

(3)

[deleted]4

4

(4)

the firm included the capital instrument, and was entitled to include it, in the calculation of its capital resources under IPRU(INV) as capital of a type that corresponded to tier one capital.

44

8.13

[FCA]

R

The following rules:

(1)

GENPRU 2.2.159 R (12) (Legal opinions for tier two capital);

(2)

GENPRU 2.2.163 R (Legal opinions for tier two capital governed by a foreign law);

(3)

GENPRU 2.2.181 R (Legal opinions for upper tier two capital); and

(4)

GENPRU 2.2.244 R (Application of certain rules about tier two capital to tier three capital) so far as it applies the rules in (1) to (3);

do not apply to a capital instrument issued by a firm if:

(5)

on 31 December 2006 the firm was subject to IPRU(INV);

4

(6)

the firm issued the capital instrument on or before 31 December 2006; and

(7)

as at 31 December 2006 the firm included the capital instrument, and was entitled to include it, in the calculation of its capital resources under IPRU(INV) as capital of the type that corresponds to:

4

(a)

(where the firm disapplies the rule in (1) or (2)) tier two capital; or

(b)

(where the firm disapplies the rule in (3)) upper tier two capital; or

(c)

(where the firm disapplies the rule in (4)) tier three capital.

Version of IPRU

8.14

[FCA]

R

Any reference in this section to a type of capital in IPRU is to a type of capital in IPRU in the form IPRU was in on 31 December 2006.

Eligibility

8.15

[FCA]

G

If this section says that an item of capital is eligible for inclusion within a particular stage of the capital resources table this is still subject to the application of the capital resources gearing rules.

Waivers and concessions

8.16

[FCA]

G

A reference to a firm being entitled to include capital instruments in the calculation of its capital resources under IPRU(INV)4 at a particular level includes the firm being able to do this under a waiver.

44

Combinations of provisions

8.17

[FCA]

G

A firm may combine the use of two or more of the provisions in this section.