Related provisions for GENPRU 1.3.21

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GENPRU 1.3.6GRP
In particular, unless an exception applies, GENPRU 1.3.4 R should be applied for the purposes of GENPRU or BIPRU14 to determine how to account for:(1) netting of amounts due to or from the firm;(2) the securitisation of assets and liabilities (see also GENPRU 1.3.7 G);(3) leased tangible assets;(4) assets transferred or received under a sale and repurchase3 or stock lending transaction; and(5) assets transferred or received by way of initial or variation margin under a derivative
GENPRU 1.3.9RRP
For the purposes of GENPRU or BIPRU14, except where a rule in GENPRU or BIPRU14 provides for a different method of recognition or valuation:(1) when a firm, upon initial recognition, designates its liabilities as at fair value through profit or loss, it must always adjust any value calculated in accordance with GENPRU 1.3.4 R by subtracting any unrealised gains or adding back in any unrealised losses which are not attributable to changes in a benchmark interest rate;(2) in respect
GENPRU 1.3.13RRP
(1) Except to the extent that GENPRU or BIPRU14 provide for another method of valuation, GENPRU 1.3.14 R to GENPRU 1.3.34 R (Marking to market, Marking to model, Independent price verification or Valuation adjustments14) apply:99(a) for the purposes set out in GENPRU 1.3.41 R;(b) for the purposes set out in GENPRU 1.3.39 R; and(c) to any balance sheet position measured at market value or fair value.(2) A firm must establish and maintain systems and controls sufficient to provide
GENPRU 1.3.17RRP
Where marking to market is not possible, a firm must (in the case of a BIPRU firm, conservatively)9use mark to model in order to measure the value of the investments and positions to which this rule applies under GENPRU 1.3.13 R and GENPRU 1.3.38 R to GENPRU 1.3.41 R. Marking to model is any valuation which has to be benchmarked, extrapolated or otherwise calculated from a market input. GENPRU 1.3.18 R to GENPRU 1.3.25 R apply when marking to model.
GENPRU 1.3.20RRP
A firm must source market inputs in line with market prices so far as possible and assess the appropriateness of the market inputs for the position being valued and the parameters of the model on a frequent basis.
GENPRU 1.3.22RRP
A firm must establish formal change control procedures, hold a secure copy of the model, and periodically use that model to check valuations.
GENPRU 1.3.23RRP
A firm must ensure that its risk management functions are aware of the weaknesses of the models used and how best to reflect those in the valuation output.
GENPRU 1.3.26RRP
In addition to marking to market or marking to model, a firm must perform independent price verification. This is the process by which market prices or model inputs are regularly verified for accuracy and independence.
GENPRU 1.3.29RRP
The recognition of any gains or losses arising from valuations subject to GENPRU 1.3.13 R and GENPRU 1.3.38 R to GENPRU 1.3.41 R must be recognised for the purpose of calculating capital resources in accordance with GENPRU 1.3.14 R to GENPRU 1.3.34 R (Marking to market, Marking to model, Independent price verification or Valuation adjustments14). However if GENPRU or BIPRU14 provide for another treatment of such gains or losses, that other treatment must be applied.99
GENPRU 1.3.31RRP
A firm using third-party valuations, or marking to model, must consider whether valuation adjustments are necessary.
GENPRU 1.3.32RRP
A firm must consider the need for making adjustments14 for less liquid positions and, on an ongoing basis, review their continued appropriateness in accordance with the requirements set out in GENPRU 1.3.33 R. Less liquid positions could arise from both market events and institution-related situations e.g. concentration positions and/or stale positions.9
GENPRU 1.3.33RRP
(1) This paragraph sets out the requirements referred to in GENPRU 1.3.30 R and GENPRU 1.3.32 R.(2) A firm must consider the following adjustments14: unearned credit spreads, close-out costs, operational risks, early termination, investing and funding costs, future administrative costs and, where appropriate, model risk.9(3) 9(a) In the case of a BIPRU firm, a firm must establish and maintain procedures for calculating adjustments to the current valuation of less liquid positions.
MIPRU 4.2F.11RRP
(1) In exercising its judgment under MIPRU 4.2F.4 R to MIPRU 4.2F.9 R, a firm may be satisfied only if the conditions in (2) to (6) are met.(2) (a) The value of the property does not materially depend upon the credit quality of the borrower. (b) The condition in (a) does not preclude situations where purely macroeconomic factors affect both the value of the property and the performance of the borrower.(3) The minimum requirements about: (a) legal certainty in MIPRU 4.2F.12 R;
MIPRU 4.2F.14RRP
(1) The requirements about monitoring of property values referred to in MIPRU 4.2F.11R (3)(b) are as follows: (a) the value of the property must be monitored on a frequent basis and, at a minimum, once every three years;(b) more frequent monitoring must be carried out where the market is subject to significant changes in conditions; (c) statistical methods may be used to monitor the value of the property and to identify property that needs revaluation; (d) the property valuation
MIPRU 4.2F.15GRP
A property will need to be revalued over time to ensure that the original purchase price does not overstate the degree of security provided by the property. Ijara providers should undertake revaluations in the same way as providers of conventional mortgages.
MIPRU 4.2F.18GRP
The review of property values required by MIPRU 4.2F.14R (1)(e) may lead to an amendment of the value assigned to the property under MIPRU 4.2F.29 R.
MIPRU 4.2F.26GRP
For MIPRU 4.2F.25 R:(1) reliable standards for the valuation of residential property include internationally recognised valuation standards, in particular those developed by the International Valuation Standards Committee (IVSC), the European Group of Valuers’ Associations (EGoVA) or the Royal Institution of Chartered Surveyors (RICS) as well as the standards in MIPRU 4.2F.27 R to MIPRU 4.2F.29 R; and(2) the requirement to use reliable standards of valuation of residential property
MIPRU 4.2F.27RRP
(1) Market value means the estimated amount for which the property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing, where the parties had each acted knowledgeably, prudently and without compulsion.(2) The market value must be documented in a transparent and clear manner.
MIPRU 4.2F.28RRP
(1) Mortgage lending value means the value of the property as determined by a prudent assessment of the future marketability of the property taking into account long-term sustainable aspects of the property, the normal and local market conditions, and the current use and alternative appropriate uses of the property.(2) Speculative elements must not be taken into account in the assessment of the mortgage lending value.(3) The mortgage lending value must be documented in a transparent
MIPRU 4.2F.32GRP
If a firm has more than one exposure secured on the same property they should be aggregated and treated as if they were a single exposure secured on the property for the purposes of MIPRU 4.2F.4 R, MIPRU 4.2F.9 R and MIPRU 4.2F.30 R.
MIPRU 4.2F.33RRP
If a firm has an exposure arising through a second-charge mortgage secured on the same property as a first-charge loan from a different firm, the exposure, taking into account the first-charge mortgage, must be split into the following components and risk weighted as follows, after taking into account the seniority of the first-charge loan:(1) the amount of the exposure or any part of the exposure, up to a limit of 80% of the value of the residential property, must be assigned
MIPRU 4.2F.35GRP
If an exposure is secured on property that is used partly for residential purposes under MIPRU 4.2F.4 R and partly for commercial purposes (such as a farm, public house, guest house or shop) it may be treated as secured by residential real estate if the firm can demonstrate that: (1) the property's main use is, or will be, residential; and(2) the value of the property is not significantly affected by its commercial use.
MIPRU 4.2F.49RRP
Exposures in the form of funds that are not past due items, that have been assigned a risk weight of 150% or greater, and for which value adjustments have been established, may be assigned a risk weight of: (1) 100% if value adjustments are no less than 20% of the exposure value gross of value adjustments; or(2) 50%, if value adjustments are no less than 50% of the exposure value gross of value adjustments
BIPRU 3.4.60RRP
(1) In the exercise of its judgement for the purposes of BIPRU 3.4.56 R to BIPRU 3.4.58 R, a firm may be satisfied only if the conditions in (2) to (6) are met.(2) The value of the property does not materially depend upon the credit quality of the obligor. This requirement does not preclude situations where purely macroeconomic factors affect both the value of the property and the performance of the borrower.(3) The risk of the borrower does not materially depend upon the performance
BIPRU 3.4.66RRP
(1) The requirements about monitoring of property values referred to in BIPRU 3.4.60 R (4)(b) are as follows:(a) the value of the property must be monitored on a frequent basis and at a minimum once every three years for residential real estate;(b) more frequent monitoring must be carried out where the market is subject to significant changes in conditions;(c) statistical methods may be used to monitor the value of the property and to identify property that needs revaluation;(d)
BIPRU 3.4.67GRP
A property will need to be revalued over time to ensure that the original purchase price does not overstate the degree of security provided by the property. Ijara providers should undertake revaluations in the same way as providers of conventional mortgages.
BIPRU 3.4.68GRP
For the purposes of BIPRU 3.4.66 R (1)(a), the monitoring of property values should be an inherent part of risk managing and tracking the portfolio. The requirement to monitor property values does not include the physical assessment of each property in the portfolio.
BIPRU 3.4.69GRP
For the purposes of BIPRU 3.4.66 R (1)(d) and (e), the review of a property valuation is more in-depth than the normal monitoring process required by BIPRU 3.4.66 R (1)(a). This requirement is likely to include a review of the property value on an individual exposure basis. Where an exposure is secured by multiple properties, the review can be undertaken at the level of the exposure, rather than at the level of each individual property.
BIPRU 3.4.70GRP
The review of property values required by BIPRU 3.4.66 R (1)(e) may lead to an amendment of the value assigned to the property under by BIPRU 3.4.80 R.
BIPRU 3.4.77RRP
The property must be valued by an independent valuer at or less than the market value. In those EEA States that have laid down rigorous criteria for the assessment of the mortgage lending value in statutory or regulatory provisions the property may instead be valued by an independent valuer at or less than the mortgage lending value.[Note: BCD Annex VIII Part 3 point 62]
BIPRU 3.4.79RRP
Mortgage lending value means the value of the property as determined by a prudent assessment of the future marketability of the property taking into account long-term sustainable aspects of the property, the normal and local market conditions, the current use and alternative appropriate uses of the property. Speculative elements must not be taken into account in the assessment of the mortgage lending value. The mortgage lending value must be documented in a transparent and clear
INSPRU 7.1.36GRP
The valuation of the assets and of the liabilities should reflect their economic substance. A realistic valuation basis should be used for assets and liabilities taking into account the actual amounts and timings of cash flows under any projections used in the assessment.
INSPRU 7.1.38GRP
The methods and assumptions used in valuing the liabilities should contain no explicit margins for risk, nor should the approach be optimistic. The valuation of liabilities should be consistent with the valuation of assets. To the extent the market price includes an implicit allowance for risk, this should be included within the valuation.
INSPRU 7.1.39GRP
The methodology used to place a value on an asset or a liability following a risk event should be consistent with the methodology used prior to the risk event.
INSPRU 7.1.40GRP
Approximate valuation methods may be used by the firm for minor lines of business or to capture less material types of risk. However, the firm should avoid methods which under-estimate the risk in aggregate.
INSPRU 7.1.49RRP
The written record of a firm'sindividual capital assessments carried out in accordance with INSPRU 7.1.15 R submitted by the firm to the appropriate regulator must:(1) in relation to the assessment comparable to a 99.5% confidence level over a one year timeframe that the value of assets exceeds the value of liabilities, document the reasoning and judgements underlying that assessment and, in particular, justify:(a) the assumptions used;(b) the appropriateness of the methodology
MCOB 5.9.1BRRP
2Where the potential SRB agreement seller has not commissioned his own valuation of the property, a firm must ensure that he realises that there are other possible sources of information on the property's value that are available to him, including local estate agents, local newspapers which carry advertisements for the sale of residential property in the customer's locality and on-line sites where details of recent property sales in the locality may be accessed.
MCOB 5.9.1CRRP
2A firm must ensure that the SRB agreement seller realises that there are other possible sources of information on the appropriate rental value for the property available to him, including local estate agents, local newspapers and on-line sites which carry advertisements for the rental of residential property in the customer's locality.
MCOB 5.9.1DGRP
2There is no requirement for the property to be valued before making the pre-sale disclosures. However, MCOB 6.9.2 R requires that an independent valuation of the property be carried out before the provider supplies the customer with the written pre-offer document at Stage One (see MCOB 6.9.3 R).
MCOB 5.9.1GGRP
2What constitutes "materially altered" requires consideration of the facts of each individual case. For example, a change in the proposed purchase or valuation price of the property should normally be regarded as material, as would the introduction of an additional charge applying to the regulated sale and rent back agreement when it did not previously.
CONC 10.2.3RRP
A firm must recognise an asset or liability, and measure its amount, in accordance with the relevant accounting principles applicable to it for the purpose of preparing its annual financial statements unless a rule requires otherwise.
CONC 10.2.11GRP
If a firm has 1000 relevant debts under management and each of those debts is £10,000, the total value of the firm'srelevant debts under management is £10,000,000. If the firm does not carry on any other regulated activity to which another higher prudential resources requirement applies, its prudential resources requirement is £20,000. This is calculated as follows:(1) 0.25% x £5,000,000 = £12,500; and(2) 0.15% x £5,000,000 = £7,500.
CONC 10.2.12GRP
If during the following year 20% (£200) of each relevant debt under management is paid off by the borrower or hirer leaving an outstanding balance of £800 on each relevant debt under management,and during that year the firm does not carry on debt adjusting in relation to any further debts due under credit agreements or consumer hire agreements, the total value of the firm'srelevant debt under management is £8,000,000. If the firm does not carry on any other regulated activity
GENPRU 2.2.91GRP
Profit and loss account and other reserves should be valued in accordance with the rules in GENPRU 1.3 (Valuation).
GENPRU 2.2.203RRP
A qualifying holding is a direct or indirect holding of a bank or building society in a non-financial undertaking which represents 10% or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that undertaking.
GENPRU 2.2.215RRP
For the purpose of the definition of a material holding, holdings must be valued using the valuation method which the holder uses for its external financial reporting purposes.
GENPRU 2.2.216GRP
(1) This paragraph gives guidance on how the calculation under GENPRU 2.2.214R (1) should be carried out where an insurance undertaking is accounted for using the embedded value method.(2) On acquisition, any "goodwill" element (that is, the difference between the acquisition value according to the embedded value method and the actual investment) should be deducted from tier one capital resources.(3) The embedded value should be deducted from the total of tier one capital resources
SUP 16.16.3GRP
(1) The purpose of this section is to set out the requirements for a firm specified in SUP 16.16.1 R to report the outcomes of its prudent valuation assessments to the FCA4 and to do so in a standard format.277(2) The purpose of collecting this data on the prudent valuation assessments made by a firm is to assist the FCA4 in assessing the capital resources of firms, to enable the FCA4 to gain a wider understanding of the nature and sources of measurement uncertainty in fair-valued
SUP 16.16.4RRP
(1) 7A firm to which this section applies must submit to the FCA4 quarterly (on a calendar year basis and not from a firm'saccounting reference date), within six weeks of each quarter end, a Prudent Valuation Return in respect of its fair-value assessments in the format set out in SUP 16 Annex 31A.2(2) [deleted]47777
MCOB 2.6A.12ARRP
4A firm must ensure that any valuation for the purposes of a regulated sale and rent back agreement is carried out by a valuer who owes a duty of care to the customer in valuing the property.
MCOB 2.6A.13ERP
(1) A valuer may be considered competent if he is a suitably qualified member of a professional body.(2) A valuer may be considered independent if:(a) the customer can choose the valuer subject to the firm objecting on reasonable grounds and to the valuer being competent;(b) he owes a duty of care to the customer in valuing the property; and(c) the customer has an appropriate remedy against him under a complaints procedure which allows the complaint to be referred to an independent
BIPRU 1.2.24RRP
Systems and controls must include at least the following elements:(1) documented policies and procedures for the process of valuation (including clearly defined responsibilities of the various areas involved in the determination of the valuation, sources of market information and review of their appropriateness, frequency of independent valuation, timing of closing prices, procedures for adjusting valuations, month end and ad-hoc verification procedures); and(2) reporting lines
BIPRU 1.2.27RRP
A firm must have clearly defined policies and procedures for overall management of the trading book. At a minimum these policies and procedures must address:(1) the activities the firm considers to be trading and as constituting part of the trading book for capital requirement purposes;(2) the extent to which a position can be marked-to-market daily by reference to an active, liquid two-way market;(3) for positions that are marked-to-model, the extent to which the firm can:(a)
LR 13.5.3CRRP
2A listed company that is entering into a class 1 transaction which falls within LR 13.5.1 R, LR 13.5.3A R or LR 13.5.3B R but cannot comply with LR 13.5.12 R (inclusion of financial information table) or, for an investment, LR 13.5.3AR (2) (inclusion of price per security and the imputed value of the entire holding), must include an appropriate independent valuation of the target in the class 1 circular.
LR 13.5.3DGRP
2The FCA may dispense with the requirement for an independent valuation under LR 13.5.3C R if it considers that this would not provide useful information for shareholders, in which case the class 1 circular must include such information as the FCA specifies.
FEES 4.4.1RRP
A firm (other than the Society and an MTF operator in relation to its MTF business5) must notify to the FCA (in its own capacity and, if applicable, in its capacity as collection agent for the PRA) the value (as at the valuation date specified in Part 5 of FEES 4 Annex 1AR6) of each element of business on which the periodic fee payable by the firm is to be calculated.15
FEES 4.4.7DRP
3A fee-paying payment service provider and a fee-paying electronic money issuer4 must notify to the FCA the value (as at the valuation date specified in Part 4 of FEES 4 Annex 11) of each element of business on which the periodic fee (other than a flat fee)4 payable by the firm under 1 R4 is to be calculated, including any payment services carried on by its agents from an establishment in the United Kingdom. 4
INSPRU 1.2.10RRP
In the actuarial valuation under PRA Rulebook: Non Solvency II firms: Insurance Company – Mathematical Reserves, 2.17, a firm must use methods and prudent assumptions which:(1) are appropriate to the business of the firm;(2) are consistent from year to year without arbitrary changes (see INSPRU 1.2.11 G);(3) are consistent with the method of valuing assets (see PRA Rulebook: Non-Solvency II firms: Insurance Company – Overall Resources and Valuation, 3)7;(4) include appropriate
INSPRU 1.2.28RRP
In a prospective valuation, a firm must:(1) include in the cash flows to be valued the following:(a) future premiums7;(b) expenses, including commissions7;(c) benefits payable (see INSPRU 1.2.29 R); and(d) subject to (2), amounts to be received or paid in respect of the long-term insurance contracts under contracts of reinsurance or analogous non-reinsurance financing agreements7; but(2) exclude from those cash flows amounts recoverable from an ISPV.
BIPRU 5.7.3RRP
Where a firm buys credit protection through a total return swap and records the net payments received on the swap as net income, but does not record offsetting deterioration in the value of the asset that is protected (either through reductions in fair value or by an addition to reserves), the credit protection must not be recognised as eligible.[Note: BCD Annex VIII Part 1 point 31]
BIPRU 5.7.13RRP
For a credit derivative to be met the following conditions must also be met.(1) Subject to (2), the credit events specified under the credit derivative must at a minimum include:(a) the failure to pay the amounts due under the terms of the underlying obligation that are in effect at the time of such failure (with a grace period that is closely in line with or shorter than the grace period in the underlying obligation);(b) the bankruptcy, insolvency or inability of the obligor
BIPRU 11.5.17RRP
A firm calculating risk weighted exposure amounts in accordance with BIPRU 9 or capital resource requirements according to BIPRU 7.2.48A R to BIPRU 7.2.48K R4 must disclose the following information, where relevant separately for its trading book and non-trading book:4(1) a description of the firm's objectives in relation to securitisation activity;(1A) the nature of other risks, including liquidity risk inherent in securitised assets;4(1B) the type of risks in terms of seniority
LR 13.6.1RRP
A related party circular must also include:(1) in all cases the following information referred to in the PD Regulation relating to the company:Paragraph of Annex 1 of the PD Regulation;(a) Annex 1 item 5.1.1 – Issuer name;(b) Annex 1 item 5.1.4 – Issuer address;(c) Annex 1 item 18.1 – Major shareholders;(d) Annex 1 item 20.9 – Significant changes;(e) Annex 1 item 22 – Material contracts (if it is information which shareholders of the company would reasonably require to make a
REC 2.3.17GRP
4The financial risk assessment should be based on a methodology which provides a reasonable estimate of the potential business losses which a UK RIE might incur in stressed but plausible market conditions. The FCA5 would expect a UK RIE to carry out a financial risk assessment at least once in every twelve-month period, or more frequently if there are material changes in the nature, scale or complexity of the UK RIE's operations or its business plans that suggest such financial
RCB 2.3.6GRP
The FCA will:(1) expect the issuer to demonstrate that it has in place appropriate systems, controls, procedures and policies, including in relation to risk management, underwriting, arrears and valuation; (2) expect the issuer to demonstrate that the cash-flows generated by the assets would be sufficient to meet the payments due in a timely manner including under conditions of economic stress and in the event of the failure of the issuer;(3) take account of any over collateralisation
FEES 4.3.17RRP
(1) 21This rule applies if: (a) a firm (A)(i) (A) acquires all or a part of the business of another firm (B), whether by merger, acquisition of goodwill or otherwise; and(B) would be required to pay a periodic fee in the fee year in which the acquisition takes place; or(ii) becomes authorised or registered as a result of another firm’s (B) simple change of legal status (as defined in FEES 3 Annex 1R Part 6); and(b) had that acquisition or simple change of legal status (or any
GENPRU 2.1.7GRP
This section sets capital resources requirements for a firm. GENPRU 2.2 (Capital resources) sets out how, for the purpose of meeting capital resources requirements, the amounts or values of capital, assets and liabilities are to be determined. More detailed rules relating to capital, assets and liabilities are set out in GENPRU 1.3 (Valuation)14 and, for a BIPRU firm, BIPRU.