FCA Handbook - IPRU-INV 14.4 GROUP FINANCIAL RESOURCES

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IPRU-INV 14.4 GROUP FINANCIAL RESOURCES

A firm must calculate its group financial resources on the basis of the consolidated accounts of the relevant group, subject to the adjustments in rule 14.4.2 and on the basis specified in rule 14.4.3.

(1)
If more than one firm in the group is subject to the rules of this chapter, group financial resources are defined according to the relevant rules applicable to the main firm in the group to which this chapter applies, with Tier 1 minority interests being allowed as Group Tier 1 capital and Tier 2 minority interests being allowed as Group Tier 2 capital.
(2)
In calculating the group financial resources, deductions should be made for intangible assets, material unaudited losses incurred since the balance sheet date and investments in own shares.
(3)
Material holdings and material insurance holdings must be recalculated on a group basis and deducted in arriving at the group financial resources.

Financial resources will be defined based upon the main firm in the group to which this chapter applies as follows:

(1)
if a broad scope securities and futures firm (excluding a venture capital firm), Table 3-61R;
(2)
[Deleted]
(3)
[Deleted]
(4)
[deleted]
(5)
[deleted]

(1)
The FCA interprets 'main' by reference to the share of the firm's business in the group, its contribution to the group's balance sheet (measured on the basis of total assets) or profit and loss statement (measured on the basis of gross income).
(2)
The form in SUP 16 Ann 19 R, together with the guidance in SUP 16 Ann 20 G, shows the mechanics of the calculation.

A firm may apply for a waiver of rule 14.4.1 to permit an aggregation approach to determine group financial resources. Any waiver application should guarantee future compliance with any relevant own funds limit.