Related provisions for BIPRU 14.2.1

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Tier one capital and tier two capital are the only type of capital resources that a BIPRU firm may use for the purpose of meeting:(1) the credit risk capital component;(2) the operational risk capital requirement;(3) the counterparty risk capital component; and(4) the base capital resources requirement.
The combined credit, operational and counterparty1 risk capital requirement is deducted after stage N of the capital resources table and the market risk requirement following stage T of the capital resources table. These calculations are shown in the table in GENPRU 2.2.56 G.

This table belongs to GENPRU 2.2.55 G

Description of the stage of the capital resources calculation

Stage in the capital resources table

Amount (£)

Total tier one capital and tier two capital after deductions

Stage N


Credit, operational, and counterparty1 risk requirement


Tier one capital and tier two capital available to meet market risk requirement


Tier three capital

Stage Q


Total capital available to meet market risk requirement


Market risk requirement


Market risk requirement met subject to meeting gearing limit set out in GENPRU 2.2.49 R – see GENPRU 2.2.57 G

In this example it is assumed that the maximum possible amount of tier one capital is carried forward to meet the market risk requirement. There are other options as to the allocation of tier one capital and tier two capital to the credit, operational, and counterparty1 risk requirement.1In order to calculate the relevant tier one capital for the upper tier three gearing limit in accordance with GENPRU 2.2.49 R it is first necessary to allocate tier one capital and tier two capital
The effect of GENPRU 2.3.34 R is that Lloyd's members' contributions, including letters of credit, guarantees and life assurance policies, are admissible assets.