Source: https://www.handbook.fca.org.uk/handbook/GENPRU/3/Annex1.html?date=2012-01-07
Timestamp: 2020-01-22 02:58:41
Document Index: 23341941

Matched Legal Cases: ['ART 3', 'ART 4', 'art 5', 'arts 1', 'arts 1', 'arts 1', 'arts 1', 'arts 1']

3. Table: PART 3: Method 3 of Annex I of the Financial Groups Directive(Book value/Requirement Method)
The conglomerate capital resources of a financial conglomerate calculated in accordance with this Part are equal to the capital resources of the person at the head of the financial conglomerate that qualify under paragraph 3.2.
The elements of capital that qualify for the purposes of paragraph 3.1 are those that qualify in accordance with the applicable sectoral rules. In particular, the portion of the conglomerate capital resources requirement attributable to a particular member of a financial sector must be met by capital resources that would be eligible under the sectoral rules that apply to the calculation of its solo capital resources.
The conglomerate capital resources requirement of a financial conglomerate calculated in accordance with this Part is equal to the sum of the following amounts for each member of the overall financial sector:
(in the case of the person at the head of the financial conglomerate) its solo capital resources requirement;
(in the case of any other member) the higher of the following two amounts:
its solo capital resources requirement; and
the book value of the interest of the person at the head of the financial conglomerate in that member.
A participation may be valued using the equity method of accounting.
The capital resources requirement of a member of the financial conglomerate in the overall financial sector must be included proportionally. If however the member has a solvency deficit and is a subsidiary undertaking, it must be included in full.
4 Table: PART 4: Method 4 of Annex I of the Financial Groups Directive(Combination of Methods 1, 2 and 3)
The rules that apply with respect to a particular financial conglomerate under GENPRU 3.1.26 R are those relating to capital adequacy and solvency set out in the table in paragraph 4.2.
5 Table: Paragraph 4.2: Application of sectoral consolidation rules
Type of financial conglomerate
BIPRU 8 and BIPRU TP, subject to paragraph 4.5.
INSPRU 6.1 amended in accordance with Part 5.
(1) This paragraph sets out how to determine the category of financial conglomerate for the purposes of paragraphs 4.1 and 4.2.
(1) a financial holding company (if the rules in BIPRU 8 ) are applied; or
(2) an insurance holding company (if the rules in INSPRU 6.1 are applied).2
Capital may not be included in:
(1) a firm's conglomerate capital resources under GENPRU 3.1.29 R; or
(2) in the capital resources of the financial conglomerate for the purposes of GENPRU 3.1.26 R;
Capital must not be included in:
(2) the capital resources of the financial conglomerate for the purposes of GENPRU 3.1.26 R;
(3) it would involve double counting or multiple use of the same capital; or
(4) it results from any inappropriate intra-group creation of capital.
(1) the solvency requirements for each different financial sector represented in a financial conglomerate required by GENPRU 3.1.26 R or, as the case may be, GENPRU 3.1.29 R must be covered by own funds elements in accordance with the corresponding applicable sectoral rules; and
(2) if there is a deficit of own funds at the financial conglomerate level, only cross sectoral capital (as referred to in that sub-paragraph) shall qualify for verification of compliance with the additional solvency requirement required by GENPRU 3.1.26 R or, as the case may be, GENPRU 3.1.29 R.
(2) If any of those rules would otherwise not apply to a situation in which they are applied by GENPRU 3 Annex 1, those rules nevertheless still apply (and in particular, any of those rules that would otherwise have the effect of disapplying consolidated supervision(or, in the case of the insurance sector, supplementary supervision) do not apply).
The following adjustments apply to the applicable sectoral rules for the banking sector and the investment services sector as they are applied by the rules in this annex.
(2) (For the purposes of Parts 1 to 3), where those rules require a group to be treated as if it were a single undertaking, those rules apply to the banking sector and investment services sector taken together.
(4) (For the purposes of Parts 1 to 4), without prejudice to the application of requirements in BIPRU 8 preventing the use of an advanced prudential calculation approach on a consolidated basis, any advanced prudential calculation approach permission that applies for the purpose of BIPRU 8 does not apply.
(5) (For the purposes of Parts 1 to 4), BIPRU 8.5.9 R and BIPRU 8.5.10 R do not apply.
(6) (For the purposes of Parts 1 to 4), where the financial conglomerate does not include a credit institution, the method in GENPRU 2 Annex 4 must be used for calculating the capital resources and BIPRU 8.6.8 R does not apply.
(1) This rule deals with a financial conglomerate in which some of the members are not linked by capital ties at the time of the notification referred to in GENPRU 3.1.28R (1) (Capital adequacy requirements: Compulsory application of Method 4 fromAnnex I of the Financial Groups Directive).
(a) GENPRU 3.1.26 R (Capital adequacy requirements: Application of Method 4 from Annex I of the Financial Groups Directive) would otherwise apply with respect to a financial conglomerate under GENPRU 3.1.28 R; and
(b) all members of that financial conglomerate are linked directly or indirectly with each other by capital ties except for members that collectively are of negligible interest with respect to the objectives of supplementary supervision of regulated entities in a financial conglomerate (the "peripheral members");
GENPRU 3.1.28 R continues to apply. Otherwise GENPRU 3.1.28 R does not apply with respect to a financial conglomerate falling into (1).
(3) If GENPRU 3.1.28 R applies with respect to a financial conglomerate in accordance with (2) the peripheral members must be excluded from the calculations under GENPRU 3.1.26 R.
(a) GENPRU 3.1.26 R applies with respect to financial conglomerate falling into (1) under GENPRU 3.1.27R (2) (Use of Part IV permission to apply Annex I of the Financial Groups Directive); or
(b) GENPRU 3.1.29 R (Capital adequacy requirements: Application of Methods 1, 2 or 3from Annex I of the Financial Groups Directive) applies with respect to a financial conglomerate falling into (1);
(c) the treatment of the links in (1) (including the treatment of any solvency deficit) is as provided for in the requirement referred to in GENPRU 3.1.30 R; and
(d) GENPRU 3.1.26 R or GENPRU 3.1.29 R, as the case may be, apply even if the applicable sectoral rules do not deal with how undertakings not linked by capital ties are to be dealt with for the purposes of consolidated supervision (or, in the case of the insurance sector, supplementary supervision).
(5) Once GENPRU 3.1.26 R applies to a firm with respect to a financial conglomerate of which it is a member under GENPRU 3.1.27R (1) (automatic application of Method 4 from Annex I of the Financial Groups Directive on satisfaction of the condition in GENPRU 3.1.28 R), the disapplication of GENPRU 3.1.28 R under (2) ceases to apply with respect to that financial conglomerate.
For the purposes of Parts 1 to 3 of this annex (but, not for the purposes of the definition of most important financial sector):
(1) an asset management company is allocated in accordance with GENPRU 3.1.39 R; and
(2) a mixed financial holding company must be treated as being a member of the most important financial sector.
(2) The solo capital resources requirement of a building society is its CRR.
(4) If there is a credit institution in the financial conglomerate, the solo capital resources requirement for any undertaking in the banking sector or the investment services sector is, subject to (2) and (3), calculated in accordance with the rules for calculating the CRR of a bank that is a BIPRU firm.
(b) there is at least one CAD investment firm in the financial conglomerate; and(c) all the CAD investment firms in the financial conglomerate are limited licence firms or limited activity firms;
the solo capital resources requirement for any undertaking in the banking sector or the investment services sector is calculated in accordance with the rules for calculating the CRR of:
(d) (if there is a limited activity firm in the financial conglomerate), a BIPRU limited activity firm; or
(e) (in any other case), a BIPRU limited licence firm.
the solo capital resources requirement for any undertaking in the banking sector or the investment services sector is calculated in accordance with the rules for calculating the CRR of a full scope BIPRU investment firm.Any CRR calculated under a BIPRU TP may be used for the purposes of the solo capital resources requirement in this rule in the same way that the CRR can be used under BIPRU 8.
(1) The solo capital resources requirement of an undertaking in the insurance sector must be calculated in accordance with this rule.
(2) Subject to (3), the solo capital resources requirement of an undertaking in the insurance sector is the capital resources requirement identified inINSPRU 6.1.34 R (1) to (8) as applying to that undertaking.
(3) INSPRU 6.1.34 R (1)(b) does not apply for the purposes of this annex.
The solo capital resources requirement for an EEA regulated entity (other than a BIPRU firm, an insurer or an EEA insurer) that is subject to the solo capital adequacy sectoral rules for its financial sector of the competent authority that authorised it is equal to the amount of capital it is obliged to hold under those sectoral rules provided that the following conditions are satisfied:
(1) (for the purposes of the banking sector and the investment services sector) those sectoral rules must correspond to the FSA's sectoral rules identified in paragraph 6.2 as applying to that financial sector;
The applicable sectoral consolidation rules for a financial sector are the FSA's sectoral rules about capital adequacy and solvency on a consolidated basis that are applied in the table in paragraph 6.10.
FSA's sectoral rules
BIPRU 8 and BIPRU TP, as adjusted under paragraph 4.5
INSPRU 6.1.
BIPRU 8 and BIPRU TP