Related provisions for GENPRU 1.2.11

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BIPRU 2.2.2GRP
(1) BIPRU 2.2 sets out guidance on GENPRU 1.2 (Adequacy of financial resources) so far as it applies to a BIPRU firm. In particular it sets out guidance on how a firm should carry out its ICAAP, as well as some factors the appropriate regulator will take into consideration when undertaking a SREP. The terms ICAAP and SREP are explained in BIPRU 2.2.4 G. BIPRU 2.2.41 R-BIPRU 2.2.43 R are rules that apply to a firm with an IRB permission.(2) BIPRU 2.2 is for the most part written
BIPRU 2.2.4GRP
The adequacy of a firm's capital needs to be assessed both by a firm and the appropriate regulator. This process involves:(1) an internal capital adequacy assessment process (ICAAP), which a firm is obliged to carry out in accordance with the ICAAP rules; and(2) a supervisory review and evaluation process (SREP), which is conducted by the appropriate regulator.
BIPRU 2.2.11GRP
As part of its SREP, the appropriate regulator will consider whether the amount and quality4 of capital which a firm should hold to meet its CRR in GENPRU 2.1 (Calculation of capital resources requirements) is sufficient for that firm to comply with the overall financial adequacy rule.4
BIPRU 2.2.12GRP
After completing a review as part of the SREP, the appropriate regulator will normally give that firm individual guidance (individual capital guidance), advising it of the amount and quality4 of capital which it should hold to meet the overall financial adequacy rule.
BIPRU 2.2.12AGRP
4As part of its SREP, the appropriate regulator will also consider whether a firm should hold a capital planning buffer and, in that case, the amount and quality of such capital planning buffer. In making these assessments, the appropriate regulator will have regard to the nature, scale and complexity of a firm's business and of the major sources of risks relevant to such business as referred to in the general stress and scenario testing rule. Accordingly, a firm's capital planning
BIPRU 2.2.12CGRP
4Where the amount or quality of capital which the appropriate regulator considers a firm should hold to meet the overall financial adequacy rule or as a capital planning buffer is not the same as that which results from a firm'sICAAP, the appropriate regulator usually expects to discuss any such difference with the firm. Where necessary, the appropriate regulator may consider the use of its powers under section 166 of the Act (Reports by skilled persons) to assist in such cir
BIPRU 2.2.13GRP
If a firm considers that the individual capital guidance4 given to it is inappropriate to its circumstances it should, consistent with Principle 11 (Relations4 with regulators), inform the appropriate regulator that it disagrees with that guidance. The appropriate regulator may reissue individual capital guidance if,4 after discussion with the firm,4 the appropriate regulator concludes that the amount or quality4 of capital that the firm should hold to meet the overall financial
BIPRU 2.2.15GRP
If, after discussion, the appropriate regulator and a firm still do not agree on an adequate level of capital, the appropriate regulator may consider using its powers under section 55J of the Act to vary on its own initiative a firm'sPart 4A permission so as to require it to hold capital in accordance with the appropriate regulator's view of the capital necessary to comply with the overall financial adequacy rule. In deciding whether it should use its powers under section 55J,
BIPRU 2.2.16GRP
If the appropriate regulator gives individual capital guidance to a firm, the appropriate regulator will state what amount and quality of capital the appropriate regulator considers the firm needs to hold in order to comply with the overall financial adequacy rule. It will generally do so by saying that the firm should hold capital resources of an amount which is 3at least equal to a specified percentage of that firm'scapital resources requirement plus one or more static add-ons
BIPRU 2.2.19GRP
(1) Individual capital guidance may also be given with respect to group capital resources. This paragraph explains how such guidance should be interpreted unless the individual capital guidance specifies another interpretation.(2) If BIPRU 8.2.1 R (General consolidation rule for a UK consolidation group) applies to the firm the guidance relates to its UK consolidation group. If BIPRU 8.3.1 R (General consolidation rule for a non-EEA sub-group) applies to the firm the guidance
BIPRU 2.2.19BGRP
4For the purposes of BIPRU 2.2.19A G, BIPRU 2.2.17 G to BIPRU 2.2.19 G apply as they apply to individual capital guidance. References in those provisions to individual capital guidance or guidance should be read as if they were references to capital planning buffer. In relation to BIPRU 2.2.19G (3) and GENPRU 1.2.59 R, where the general stress and scenario testing rule, as part of the ICAAP rules, applies to a firm on a consolidated basis, the appropriate regulator may notify
BIPRU 2.2.21GRP
In the circumstance set out in BIPRU 2.2.20 G, the appropriate regulator may ask a firm for alternative or more detailed proposals and plans or further assessments and analyses of capital adequacy and risks faced by the firm. The appropriate regulator will seek to agree with the firm appropriate timescales and scope for any such additional work, in light of the circumstances which have arisen.
BIPRU 2.2.29GRP
(1) A firm may take into account factors other than those identified in the overall Pillar 2 rule when it assesses the level of capital it wishes to hold. These factors might include external rating goals, market reputation and its strategic goals. However, a firm should be able to distinguish, for the purpose of its dialogue with the appropriate regulator, between capital it holds in order to comply with the overall financial adequacy rule, capital that it holds as a capital
BIPRU 2.2.47GRP
In considering if there are any systems and control weaknesses and their effect on the adequacy of the CRR, a firm should be able to demonstrate to the appropriate regulator that all the issues identified in SYSC1 have been considered and that appropriate plans and procedures exist to deal adequately with adverse scenarios.
BIPRU 2.2.63GRP
As an asset manager's mandates become more complex, the risk of it failing to comply fully with the terms of its contracts increases. In the event of such failure, a firm can be exposed to substantial losses resulting from customers' claims and legal actions. Although the appropriate regulator would expect an asset manager to have in place adequate controls to mitigate that risk, it may also like to consider the potential cost to it should customers claim that it has not adhered
BIPRU 2.2.71GRP
A firm may approach its assessment of adequate capital by developing a model, including an ECM (see BIPRU 2.2.27 G), for some or all of its business risks. The assumptions required to aggregate risks modelled and the confidence levels adopted should be considered by a firm's senior management. A firm should also consider whether any relevant risks, including systems and control risks, are not captured by the model.
IFPRU 2.3.1GRP
(1) IFPRU 2.3 sets out guidance on IFPRU 2.2 (Adequacy of financial resources) so far as it applies to an IFPRU investment firm. In particular, guidance on how a firm should carry out its ICAAP, as well as some factors the FCA will take into consideration when undertaking a SREP. The terms ICAAP and SREP are explained in IFPRU 2.3.3 G. IFPRU 2.3.48 G to IFPRU 2.3.52 R are rules that apply to a firm with an IRB permission.(2) IFPRU 2.3 is mainly written on the basis that IFPRU
IFPRU 2.3.11GRP
After completing a review as part of the SREP, the FCA will normally give that firm individual guidance (individual capital guidance), advising it of the amount and quality of capital which it should hold to meet the overall financial adequacy rule.
IFPRU 2.3.12GRP
(1) As part of its SREP, the FCA will also consider whether a firm should hold a capital planning buffer and the amount and quality of such capital planning buffer. 2(2) In making these assessments, the FCA will have regard to the nature, scale and complexity of a firm's business and of the major sources of risks relevant to such business as referred to in the general stress and scenario testing rule and SYSC 20 (Reverse stress testing), and the extent to which the firm has used
IFPRU 2.3.14GRP
Where the amount or quality of capital which the FCA considers a firm should hold to meet the overall financial adequacy rule or as a capital planning buffer is not the same as that which results from a firm'sICAAP, the FCA usually expects to discuss any such difference with the firm. Where necessary, the FCA may consider the use of its powers under section 166 of the Act (Reports by skilled persons) to assist in such circumstances.
IFPRU 2.3.15GRP
If a firm considers that the individual capital guidance given to it is inappropriate to its circumstances it should, consistent with Principle 11 (Relations with regulators), inform the FCA that it disagrees with that guidance. The FCA may reissue the individual capital guidance if, after discussion with the firm, the FCA concludes that the amount or quality of capital that the firm should hold to meet the overall financial adequacy rule is different from the amount or quality
IFPRU 2.3.18GRP
If, after discussion, the FCA and a firm still do not agree on an adequate level of capital, the FCA may consider using its powers under section55L of the Act on its own initiative to require the firm1 to hold capital in line with the FCA's view of the capital necessary to comply with the overall financial adequacy rule. In deciding whether it should use its powers under section 55L,1the FCA will take into account the amount and quality of the capital planning buffer which the
IFPRU 2.3.19GRP
If the FCA gives individual capital guidance to a firm, the FCA will state what amount and quality of capital the FCA considers the firm needs to hold in order to comply with the overall financial adequacy rule. It will generally do so by saying that the firm should hold own funds of an amount which is at least equal to a specified percentage of that firm'stotal risk exposure amount2 plus one or more static add-ons for specific risks, in line with the overall Pillar 2 rule.
IFPRU 2.3.21GRP
Where the FCA notifies a firm that it should hold a capital planning buffer, the notification will state what amount and quality of capital the FCA considers is adequate for the firm to hold. This will normally be notified to the firm, together with its individual capital guidance and expressed as a separate amount of own funds that the firm should hold in excess of the amount of own funds indicated as its individual capital guidance.
IFPRU 2.3.35GRP
For a firm that is a significant IFPRU firm (see IFPRU 1.2.3 R1) and whose activities are moderately complex, in carrying out its ICAAP, IFPRU 2.3.34 G (2) to IFPRU 2.3.34 G (4) apply. In addition, it could: 1(1) having consulted the management in each major business line, prepare a comprehensive list of the major risks to which the business is exposed;(2) estimate, with the aid of historical data, where available, the range and distribution of possible losses which might arise
IFPRU 2.3.36GRP
(1) This paragraph applies to a proportional ICAAP in the case of a firm that is a significant IFPRU firm (see IFPRU 1.2.3 R) whose activities are complex.(2) A proportional approach to that firm'sICAAP should cover the matters identified in IFPRU 2.3.34 G and IFPRU 2.3.35 G, but is likely also to involve the use of models, most of which will be integrated into its day-to-day management and operation.(3) Models of the kind referred to in (2) may be linked to generate an overall
IFPRU 2.3.38GRP
(1) A firm may take into account factors other than those identified in the overall Pillar 2 rule when it assesses the level of capital it wishes to hold. These factors might include external rating goals, market reputation and its strategic goals. However, a firm should be able to distinguish, for the purpose of its dialogue with the FCA, between capital it holds to comply with the overall financial adequacy rule, capital it holds as a capital planning buffer and capital held
IFPRU 2.3.42GRP
A firm should assess and monitor, in detail, its exposure to sectoral, geographic, liability and asset concentrations. The FCA considers that concentrations in these areas increase a firm's exposure to credit risk. Where a firm identifies such concentrations it should consider the adequacy of its own funds requirements.
IFPRU 2.3.50RRP
A firm with an IRB permission must ensure that there is no significant risk of it being unable to meet its own funds requirements for credit risk under Part Three, Title II of the EU CRR (Capital requirements for credit risk) at all times throughout an economic cycle, including the own funds requirements for credit risk indicated by any stress test carried out under article 177 of the EU CRR (Stress tests used in assessment of capital adequacy for a firm with an IRB permission)
IFPRU 2.3.56GRP
In considering if there are any systems and control weaknesses, and their effect on the adequacy of the own funds requirements, a firm should be able to demonstrate to the FCA that all the issues identified in SYSC have been considered and that appropriate plans and procedures exist to deal adequately with adverse scenarios.
IFPRU 2.3.60GRP
As an asset manager's mandates become more complex, the risk of it failing to comply fully with the terms of its contracts increases. In the event of such failure, a firm can be exposed to substantial losses resulting from customers' claims and legal actions. Although the FCA would expect an asset manager to have adequate controls in place to mitigate that risk, it may also like to consider the potential cost to it if customers claim that it has not adhered to mandates. Past claims
IFPRU 2.2.1RRP
A firm must, at all times, maintain overall financial resources and internal capital, including own funds and liquidity resources which are adequate both as to amount and quality to ensure there is no significant risk that its liabilities cannot be met as they fall due.
IFPRU 2.2.4GRP
The liabilities referred to in the overall financial adequacy rule:2(1) include:2(a) a firm's contingent and prospective liabilities;2(b) liabilities or costs that arise in scenarios where the firm is a going concern and those where the firm ceases to be a going concern;2(c) claims that could be made against a firm, which ought to be paid in accordance with fair treatment of customers, even if such claims could not be legally enforced; and2(d) claims on insurance that a firm has
IFPRU 2.2.5GRP
In the light of IFPRU 2.2.4 G, a firm should make its assessment of adequate financial resources on realistic valuation bases for assets and liabilities, taking into account the actual amounts and timing of cash flows under realistic adverse projections.
IFPRU 2.2.7RRP
A firm must have in place sound, effective and comprehensive strategies, processes and systems:(1) to assess and maintain, on an ongoing basis, the amounts, types and distribution of financial resources, own funds and internal capital that it considers adequate to cover:(a) the nature and level of the risks to which it is, or might be, exposed;(b) the risk in the overall financial adequacy rule;(c) the risk that the firm might not be able to meet the obligations in Part Three
IFPRU 2.2.37RRP
(1) As part of its obligation under the overall Pillar 2 rule, a firm that is a significant IFPRU firm must:(a) for the major sources of risk identified in line with IFPRU 2.2.7R(2), carry out stress tests and scenario analyses that are appropriate to the nature, scale and complexity of those major sources of risk and to the nature, scale and complexity of the firm's business; and(b) carry out the reverse stress testing under SYSC 20 (Reverse stress testing).(2) In carrying out
IFPRU 2.2.41GRP
A firm should assign adequate resources, including IT systems, to stress testing and scenario analysis, taking into account the stress testing techniques used, in order to accommodate different and changing stress tests at an appropriate level of granularity.
IFPRU 2.2.51RRP
For the purpose of the ICAAPrules as they apply on a consolidated basis or on a sub-consolidated basis: (1) the firm must ensure that the FCA consolidation group has the processes, strategies and systems required by the overall Pillar 2 rule;(2) the risks to which the overall Pillar 2 rule and the general stress and scenario testing rule refer are those risks as they apply to each member of the FCA consolidation group;(3) the reference in the overall Pillar 2 rule to amounts
IFPRU 2.2.56GRP
The purpose of IFPRU 2.2.52 R to IFPRU 2.2.55 G is to enable the FCA to assess the extent, if any, to which a firm's assessment, calculated on a consolidated basis, is lower than it would be if each separate legal entity were to assess the amount of capital it would require to mitigate its risks (to the same level of confidence) were it not part of a group subject to consolidated supervision under Part One, Title II, Chapter 2 of the EUCRR (Prudential consolidation). The reason
IFPRU 2.2.61RRP
The overall financial adequacy rule applies to a firm on an individual basis, whether or not it also applies to the firm on a consolidated basis or sub-consolidated basis.
IFPRU 2.2.62RRP
The overall financial adequacy rule applies to a firm on a consolidated basis if the ICAAPrules apply to it on a consolidated basis and applies to a firm on a sub-consolidated basis if the ICAAPrules apply to it on a sub-consolidated basis.
IFPRU 2.2.63RRP
When the overall financial adequacy rule applies on a consolidated basis or sub-consolidated basis, the firm must ensure that at all times its FCA consolidation group maintains overall financial resources and internal capital, including own funds and liquidity resources, which are adequate, both as to amount and quality, to ensure that there is no significant risk that the liabilities of any members of its FCA consolidation group cannot be met as they fall due.
IFPRU 2.2.73GRP
(1) In identifying an appropriate range of adverse circumstances and events in accordance with IFPRU 2.2.37 R (2):(a) a firm will need to consider the cycles it is most exposed to and whether these are general economic cycles or specific to particular markets, sectors or industries;(b) for the purposes of IFPRU 2.2.37 R (2)(a), the amplitude and duration of the relevant cycle should include a severe downturn scenario based on forward-looking hypothetical events, calibrated against
IFPRU 2.2.80GRP
If a firm has a current funding obligation in excess of normal contributions or there is a risk that such a funding obligation will arise then, when calculating available capital resources, the firm should include these sources of risk as part of its:2(1) stress tests and scenario analysis under IFPRU 2.2.37R and considering at least the scenarios in IFPRU 2.2.81G; and2(2) capital projections under IFPRU 2.2.73G.2
GENPRU 3.1.1RRP
1(1) Unless otherwise stated,8GENPRU 3.1 applies to every firm that is a member of a financial conglomerate other than:(a) an incoming EEA firm;(b) an incoming Treaty firm;(c) a UCITS qualifier;(d) an ICVC;8(e) a bank;8(f) a designated investment firm; and8(g) an insurer.8(1A) GENPRU 3.1 (except GENPRU 3.1.5R to GENPRU 3.1.13G) applies to each of the following firms that is a member of a financial conglomerate:8(a) a bank;8(b) a designated investment firm; and8(c) an insurer
GENPRU 3.1.12RRP
The solvency and capital adequacy requirements referred to in the financial conglomerate definition decision tree must be calculated in accordance with the provisions of the relevant sectoral rules.
GENPRU 3.1.14GRP
The capital adequacy provisions of GENPRU 3.1 are designed to be applied to EEA-based financial conglomerates.
GENPRU 3.1.15GRP
GENPRU 3.1.25 R is a high level capital adequacy rule. It applies whether or not the FCA8 is the coordinator of the financial conglomerate concerned.
GENPRU 3.1.16GRP
4GENPRU 3.1.29 R4 to GENPRU 3.1.31 R and GENPRU 3 Annex 1 implement the detailed capital adequacy requirements of the Financial Groups Directive. They only deal with a financial conglomerate for which the FCA8 is the coordinator. If another competent authority is coordinator of a financial conglomerate, those rules do not apply with respect to that financial conglomerate and instead that coordinator will be responsible for implementing those detailed requirements.
GENPRU 3.1.17GRP
Annex I of the Financial Groups Directive lays down three5 methods for calculating capital adequacy at the level of a financial conglomerate. Those three5 methods are implemented as follows:55(1) Method 1 calculates capital adequacy using accounting consolidation. It is implemented by GENPRU 3.1.29 R to GENPRU 3.1.31 R and Part 1 of GENPRU 3 Annex 1.(2) Method 2 calculates capital adequacy using a deduction and aggregation approach. It is implemented by GENPRU 3.1.29 R to GENPRU
GENPRU 3.1.25RRP
(1) A firm that is a member of a financial conglomerate must at all times have capital resources of such an amount and type that results in the capital resources of the financial conglomerate taken as a whole being adequate.(2) This rule does not apply with respect to any financial conglomerate until notification has been made that it has been identified as a financial conglomerate as contemplated by Article 4(2) of the Financial Groups Directive.
GENPRU 3.1.29RRP
If,5 with respect to a firm and a financial conglomerate of which it is a member, this rule applies under GENPRU 3.1.29A R5 to the firm with respect to that financial conglomerate as described in GENPRU 3.1.30 R, the firm must at all times have capital resources of an amount and type that ensures that the conglomerate capital resources of that financial conglomerate at all times equal or exceed its conglomerate capital resources requirement.5
GENPRU 3.1.30RRP
If GENPRU 3.1.29 R (application of Method 1 or 2 from Annex I of the Financial Groups Directive) applies to a firm with respect to the financial conglomerate of which it is a member, then with respect to the firm and the financial conglomerate:5(1) the definitions of conglomerate capital resources and conglomerate capital resources requirement that apply for the purposes of that rule are the ones from whichever of Part 1 or Part 2 of GENPRU 3 Annex 1 the firm has indicated to
SUP 16.12.2GRP
(1) Principle 4 requires firms to maintain adequate financial resources. The Interim Prudential sourcebooks, BIPRU,37GENPRU and IFPRU37 set out the FCA's65 detailed capital adequacy requirements. By submitting regular data, firms enable the FCA65 to monitor their compliance with Principle 4 and their prudential requirements.8437848484848437(2) The data items submitted help the FCA65 analyse firms' financial and other conditions and performance and to understand their business.
SUP 16.12.9RRP
2The applicable data items referred to in SUP 16.12.4 R are set out according to type of firm in the table below.11The applicable reporting frequencies for submission of data items and periods referred to in SUP 16.12.4 R are set out in the table below and are calculated from a firm'saccounting reference date, unless indicated otherwise.The applicable due dates for submission referred to in SUP 16.12.4 R are set out in the table below. The due dates are the last day of the periods
SUP 16.12.11RRP
The applicable data items referred to in SUP 16.12.4 R are set out according to firm type in the table below:Description of data item45Firms' prudential category and applicable data items(note 1)IFPRU investment firms and BIPRU firmsFirmsother thanBIPRU firms or IFPRU investment firmsIFPRUBIPRUIPRU(INV)Chapter 3IPRU(INV)Chapter 5IPRU(INV)Chapter 9IPRU(INV)Chapter 1338Solvency statementNo standard format (note 11)No standard format (note 20)No standard format (note 11)38Balance
SUP 16.12.15RRP
The applicable data items referred to in SUP 16.12.4 R are set out76 according to firm type76 in the table below: 48Description of data itemFirms' prudential category and applicable data items (note 1)IFPRU investment firms and BIPRU firmsFirms other than BIPRU firms or IFPRU investment firmsIFPRUBIPRUIPRU(INV) Chapter 3IPRU(INV) Chapter 5IPRU(INV) Chapter 9IPRU(INV) Chapter 11 (collective portfolio management firms only)IPRU(INV) Chapter 1248IPRU(INV) Chapter 1338Solvency statementNo
SUP 16.12.18BRRP
The applicable data items, reporting frequencies and submission deadlines referred to in SUP 16.12.4 R are set out in the table below. Reporting frequencies are calculated from a firm'saccounting reference date, unless indicated otherwise. The due dates are the last day of the periods given in the table below following the relevant reporting frequency period.46Description of data itemData item (note 1)FrequencySubmission deadlineBalance SheetSections A.1 and A.2 MLARQuarterly20
SUP 16.12.19ARRP
2The applicable data items80 referred to in SUP 16.12.4 R are set out according to type of firm8 in the table below:888Description of data item11Firms’76 prudential category and applicable data items76 (note 1)IPRU(INV) Chapter 3IPRU(INV) Chapter 5IPRU(INV) Chapter 9IPRU(INV)Chapter 1343Solvency statement (note 6)5No standard format543Balance sheetFSA02911FSA02911FSA029FSA029 or Section A RMAR (note 7)114311Income statementFSA03011FSA03011FSA030FSA030 or Section B RMAR (note
SUP 16.12.22ARRP
2The applicable data items referred to in SUP 16.12.4 R are set out according to type of firm in the table below:45Description ofData itemFirms' prudential category and applicable data item (note 1)IFPRUBIPRU firmExempt CAD firmssubject toIPRU(INV)Chapter 13Firms(other thanexempt CAD firms) subject toIPRU(INV)Chapter 13Firmsthat are also in one or more ofRAGs1 to 6 and not subject toIPRU(INV)Chapter 13Solvency statementNo standard format (note 11)Balance SheetFSA001/FINREP (Notes
SUP 16.12.25ARRP
2The applicable data items referred to in SUP 16.12.4 R are set out according to type of firm in the table below:45Description of data itemFirms' prudential category and applicable data item(note 1)IFPRU investment firms and BIPRU firmsFirmsother thanBIPRU firms or IFPRU investment firmsIFPRUBIPRUIPRU(INV)Chapter 3IPRU(INV)Chapter 5IPRU(INV)Chapter 9IPRU(INV)Chapter 1338Solvency statement (note 11)No standard format38Balance sheetFSA001/FINREP (Notes 2 and 30)FSA001 (Note 2)FSA029FSA029FSA029Section
SUP 16.12.28ARRP
2The applicable data items, reporting frequencies and submission deadlines referred to in SUP 16.12.4 R are set out in the table below. Reporting frequencies are calculated from a firm'saccounting reference date, unless indicated otherwise. The due dates are the last day of the periods given in the table below following the relevant reporting frequency period.Description of data item11Data item11 (note 1)FrequencySubmission deadlineAnnual regulated business revenue up to and including
SUP 16.12.29CRRP
47The applicable data items, reporting frequencies and submission deadlines referred to in SUP 16.12.4 R are set out in the table below. Reporting frequencies are calculated from a firm'saccounting reference date, unless indicated otherwise. The due dates are the last day of the periods given in the table below following the relevant reporting frequency period.Description of data itemData item (note 1)FrequencySubmission deadlineAnnual revenue from credit-related regulated activities
SUP 16.12.33RRP
Financial reports from a member of a financial conglomerate (see SUP 16.12.32 R)Content of ReportForm (Note 1)FrequencyDue DateCalculation of supplementary capital adequacy requirements in accordance with one of the three42 technical calculation methods42Note 2Note 5Yearly42Note 5Identification of significant risk concentration levelsNote 3Yearly4 months after year endIdentification of significant intra-group transactionsNote 4Yearly4 months after year endReport on compliance
GENPRU 1.2.11AGRP
13In the case of a collective portfolio management investment firm, GENPRU 1.2.11 G means that this section also applies to its activities in relation to the management of AIFs and/or UCITS.
GENPRU 1.2.12GRP
Adequate financial resources and adequate systems and controls are necessary for the effective management of prudential risks. This section therefore has requirements relating to both of these topics.
GENPRU 1.2.13GRP
This section amplifies Principle 4, under which a firm must maintain adequate financial resources. It is concerned with the adequacy of the financial resources that a firm needs to hold in order to be able to meet its liabilities as they fall due. These resources include both capital and liquidity resources.121212512
GENPRU 1.2.56GRP
Whereas a single legal entity can generally use its capital to absorb losses wherever they arise, there are often practical and legal restrictions on the ability of a group to do so. For instance:(1) capital which is held by overseas regulated firms may not be capable of being remitted to a firm in the UK which has suffered a loss;(2) a firm which is insolvent or likely to become so may be obliged to look to the interests of its creditors first before transferring capital to other
GENPRU 1.2.59RRP
(1) When the overall financial adequacy rule applies on a consolidated basis, the firm must ensure that at all times its group maintains overall financial resources, including capital resources and liquidity resources, which are adequate, both as to amount and quality, to ensure that there is no significant risk that the liabilities of any members of its group cannot be met as they fall due.(2) The group referred to in (1) is the relevant group as defined in GENPRU 1.2.49 R.(3)
GENPRU 1.2.76GRP
A firm should use the results of its stress testing and scenario analysis not only to assess capital needs, but also to decide if measures should be put in place to minimise the adverse effect on the firm if the risk covered by the stress or scenario test actually materialises. Such measures might be a contingency plan or might be more concrete risk mitigation steps.
GENPRU 1.2.81GRP
If a firm has a current funding obligation in excess of normal contributions or there is a risk that such a funding obligation will arise then, when calculating available capital resources, it should reverse out any accounting deficit and replace this in its capital adequacy assessment with its best estimate, calculated in discussion with the scheme's actuaries or trustees, of the cash that will need to be paid into the scheme in addition to normal contributions over the foreseeable
GENPRU 2.2.77RRP
(1) This rule applies to a tier one instrument, tier two instrument or tier three instrument (instrument A) that under its terms is exchanged for or converted into another instrument or is subject to a similar process.(2) This rule also applies to instrument A if under its terms it is redeemed out of the proceeds of the issue of new securities.(3) If the instrument with which instrument A is replaced is included in the same stage of capital or a higher stage of capital as instrument
GENPRU 2.2.79GRRP
8A BIPRU firm must not purchase a tier one instrument in accordance with GENPRU 2.2.79A R unless it has notified the FCA18 of its intention at least one month before it becomes committed to doing so. When giving notice, the firm must provide details of its position after the purchase in order to show how, over an appropriate timescale, adequately stressed, and without planned recourse to the capital markets, it will:(1) meet its capital resources requirement; and(2) have sufficient
GENPRU 2.2.79HGRP
8The FCA18 considers that:(1) in order to comply with GENPRU 2.2.79G R, the firm should, at a minimum, provide the FCA18 with the following information:(a) a comprehensive explanation of the rationale for the purchase;(b) the firm's financial and solvency position before and after the purchase, in particular whether the purchase, or other foreseeable internal and external events or circumstances, may increase the risk of the firm breaching its capital resources requirement or
GENPRU 2.2.174RRP
In relation to a tier two instrument, a firm must notify the :(1) [deleted]18(2) [deleted]18FCA one month18 before it becomes committed to7 the proposed repayment (unless that firm intends to repay an instrument on its final maturity date). When giving notice, the firm must provide details of its position after such repayment in order to show how it will:777(3) meet its capital resources requirement; and7(4) have sufficient financial resources to meet the overall financial adequacy
GENPRU 2.2.219RRP
A reciprocal cross-holding means a holding of the BIPRU firm of shares, any other interest in the capital, and subordinated debt, whether in the trading or non-trading book, in:(1) a credit institution; or(2) a financial institution;that satisfies the following conditions:(3) the holding is the subject of an agreement or arrangement between the BIPRU firm and either the issuer of the instrument in question or a member of a group to which the issuer belongs;(4) under the terms
GENPRU 2.2.220RRP
For the purpose of GENPRU 2.2.219 R, a relevant rule means a rule in GENPRU, BIPRU or INSPRU or any other capital adequacy or solvency requirements of the FCA18 or any other regulator, territory or country.
IPRU-INV 5.2.1RRP
1A firm must at all times have available the amount and type of financial resources required by the rules in this chapter.
IPRU-INV 5.2.2RRP
A firm must ensure that, at all times, its financial resources are not less than its financial resources requirement.
IFPRU 2.1.3GRP
This section amplifies Principle 4, under which a firm must maintain adequate financial resources. It is concerned with the adequacy of the financial resources that a firm needs to hold in order to meet its liabilities as they fall due. These resources include both capital and liquidity resources.
IFPRU 2.1.5GRP
This section has rules requiring a firm to carry out appropriate stress tests and scenario analyses for the risks it has previously identified and to establish the amount of financial resources and internal capital needed in each of the circumstances and events considered in that analyses. The FCA will consider, as part of its SREP, whether the firm should hold a capital planning buffer and the amount and quality of that buffer. The capital planning buffer is an amount separate,
IFPRU 2.1.6GRP
1This section has rules on the individual, sub-consolidated basis and consolidated basis application of:(1) the ICAAP rules in IFPRU 2.2.45R to IFPRU 2.2.49R (Level of application: ICAAP rules);(2) the risk control rules in IFPRU 2.2.58R to IFPRU 2.2.60R (Level of application: risk control rules); and(3) the overall financial adequacy rule in IFPRU 2.2.61R to IFPRU 2.2.63R (Level of application: overall financial adequacy rule).
COND 2.4.1AUKRP
(1) 8The resources of A must be appropriate in relation to the regulated activities that A carries on or seeks to carry on.(2) The matters which are relevant in determining whether A has appropriate resources include-(a) the nature and scale of the business carried on, or to be carried on, by A;(b) the risks to the continuity of the services provided by, or to be provided by, A; and(c) A’s membership of a group and any effect which that membership may have.(3) Except in a case
COND 2.4.3GRP
(1) [deleted]88(2) Although8 it is the firm that is being assessed, the FCA8 may take into consideration the impact of other members of the firm's group on the adequacy of its resources8, where relevant to the discharge of the FCA's functions8. For example, in relation to a firm other than a firm carrying on, or seeking to carry on, a PRA-regulated activity, the FCA8 may assess the consolidated solvency of the group. The FCA's8 approach to the consolidated supervision of such
COND 2.4.4GRP
(1) [deleted]88(2) Relevant matters to which the FCA may have regard when assessing whether a firm will satisfy, and continue to satisfy, this threshold condition8may include but are not limited to:(a) (in relation to a firm other than a firm carrying on, or seeking to carry on, a PRA-regulated activity),8 whether there are any indications that the firm may have difficulties if the application is granted, at the time of the grant or in the future, in complying with any of the
MIPRU 4.2D.2RRP
A firm must at all times maintain liquidity resources which are adequate, both as to amount and quality, to ensure that there is no significant risk that its liabilities cannot be met as they fall due.
MIPRU 4.2D.3GRP
In assessing the adequacy of liquidity resources, a firm should have regard to the overall character of the resources available to it, which enable it to meet its liabilities as they fall due. A firm should ensure that:(1) it holds sufficient assets which are marketable, or otherwise realisable;(2) it is able to generate funds from those assets in a timely manner; and(3) it maintains a prudent funding profile in which its assets are of appropriate maturities, taking into account
GENPRU 2.1.6GRP
Principle 4 requires a firm to maintain adequate financial resources. GENPRU 2 sets out provisions that deal specifically with the adequacy of that part of a firm's financial resources that consists of capital resources. The adequacy of a firm'scapital resources needs to be assessed both by that firm and the appropriate regulator. Through its rules, the FCA14 sets minimum capital resources requirements for firms. It also reviews a firm's own assessment of its capital needs,
GENPRU 2.1.10GRP
For the purposes of GENPRU 2.1.9 R, a firm should have systems in place to enable it to be certain whether it has adequate capital resources to comply with14 the main BIPRU firm Pillar 1 rules14 at all times. This does not necessarily mean that a firm needs to measure the precise amount of its capital resources and its CRR on a daily basis. A firm should, however, be able to demonstrate the adequacy of its capital resources at any particular time if asked to do so by the FCA1
GENPRU 2.1.12GRP
The FCA14 may impose a higher capital requirement than the minimum requirement set out in this section as part of the firm's Part 4A permission (see GENPRU 1.2 (Adequacy of financial resources) and14BIPRU 2.2 (Internal capital adequacy standards)14).
CASS 5.4.4RRP
A firm may not handle client money in accordance with the rules in this section unless each of the following conditions is satisfied:(1) the firm must have and maintain systems and controls which are adequate to ensure that the firm is able to monitor and manage its client money transactions and any credit risk arising from the operation of the trust arrangement and, if in accordance with CASS 5.4.2 R a firm complies with both the rules in CASS 5.3 and CASS 5.4, such systems and
CASS 5.4.5GRP
The amount of a firm's capital resources maintained for the purposes of 2MIPRU 4.2.11 R2 will also satisfy (in whole or in part) the requirement in CASS 5.4.4 R (4).
GENPRU 3.2.9RRP
If the Part 4A permission of a firm contains a requirement obliging it to comply with this rule with respect to a third-country banking and investment group of which it is a member, it must comply, with respect to that third-country banking and investment group, with the rules in Part 2 of GENPRU 3 Annex 2, as adjusted by Part 3 of that annex.
BIPRU 7.10.89RRP
A firm must have procedures to assess and respond to the results produced from stress testing. In particular, stress testing results must be:(1) used to evaluate its capacity to absorb such losses or identify steps to be taken to reduce risk; and(2) communicated routinely to senior management and periodically to the governing body.
BIPRU 7.10.99GRP
The ultimate purpose of backtesting is to assess whether capital is sufficient to absorb actual losses. Actual daily profit and loss means the day's profit and loss arising from trading activities within the scope of the VaR model permission. This measure should, however, be 'cleaned' using BIPRU 7.10.100R inclusion in profit and loss of non-modelled factors.3
BIPRU 7.10.134GRP
By modifying GENPRU 2.1.52 R (Calculation of the market risk capital requirement) to allow the firm to use the VaR model to calculate all or part of its PRR for certain positions, the appropriate regulator is treating it like an application rule. The modification means that the PRR calculation set out in BIPRU 7.10 supersedes the standard market risk PRR rules for products and risks coming within the scope of the VaR model permission.
SUP App 2.7.1GRP
For a dormant fund account operator, unless2 any of SUP App 2.4.1 R, SUP App 2.5.1 R, SUP App 2.5.3 R or SUP App 2.6.1 R applies, if a firm's circumstances change, such that its capital resources have fallen, or are expected to fall, below the level advised in individual capital guidance1 given to the firm by the FCA2 , then, consistent with PRIN 2.1.1 RPrinciple 11 (Relations with regulators), a firm should inform the appropriate regulator of this fact as soon as practicable,
The reporting requirements of capital adequacy for a collective portfolio management firm and a collective portfolio management investment firm are set out in SUP 16.12 (Integrated regulatory reporting). In summary, the relevant capital adequacy forms for its business of managing an AIF or managing a UCITS are as follows: (1) a collective portfolio management firm is required to submit FIN066 (and FSA042 if it is a UCITS firm);(2) a collective portfolio management
BIPRU 1.2.22RRP
A firm must establish and maintain systems and controls to manage its trading book, in accordance with the trading book systems and controls rules, BIPRU 1.2.6 R (Definition of the trading book: Repos) and the overall financial adequacy rule to BIPRU 1.2.27 R (Trading book policy statements).[Note: CAD Article 11(4)]
BIPRU 1.2.29RRP
(1) The policies and procedures referred to in the overall financial adequacy rule and BIPRU 1.2.27 R must be recorded in a single written document. A firm may record those policies and procedures in more than one written document if the firm has a single written document that identifies:(a) all those other documents; and(b) the parts of those documents that record those policies and procedures.(2) A trading book policy statement means the single document referred to in this
IFPRU 4.8.12GRP
The FCA expects the time horizon for additional drawings to be the same as the time horizon for defaults. This means that EAD estimation need cover only additional drawings that might take place in the next year, such that:(1) no own funds requirements need be held against facilities, or proportions of facilities that cannot be drawn down within the next year; and(2) where facilities can be drawn down within the next year, firms may, in principle, reduce their estimates to the
IFPRU 4.8.19GRP
If the availability of a facility is subject to a further credit assessment by the firm, an EAD/CF may not be required. However, the FCA expects this to be the case only if the subsequent credit assessment was of substantially equivalent rigour to that of the initial credit approval and if this includes a re-rating or a confirmation of the rating of the borrower.