Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to:

1. (1) every firm that is a CRR firm; and
2. (2) a CRR consolidation entity.

1.2

In this Part the following definitions shall apply:

third country banking and investment group

means a group that meets the following conditions:

1. (1) it is headed by a third country undertaking that would be:
1. (a) an institution;
2. (b) a financial holding company, or
3. (c) a mixed financial holding company,
4. if its head office was in the UK; and
2. (2) it is not part of a wider consolidation group.

1.3

Unless otherwise defined:

1. (1) any italicised expression used in this Part and in the CRR has the same meaning as in the CRR; and
2. (2) any italicised expression used in this Part and in the CRD has the same meaning as in the CRD.

2.A1

This chapter applies to a firm for the purposes of its obligations under Parts Two and Three of the CRR.

2.1

1. (1) In applying the requirements of Part One, Title II, Chapter 2 of the CRR for the purposes of prudential consolidation, a CRR consolidation entity must include the relevant proportion of an undertaking with whom it has:
   1. (a) a common management relationship;
   2. (b) an Article 18(6) relationship; or
   3. (c) an Article 18(8) relationship.
2. (2) In 2.1(1), the relevant proportion is such proportion (if any) as stated in a requirement imposed on the firm in accordance with section 55M of FSMA.

[Note: Art 18(3), (6) and (8) of the CRR]

2.2

In applying the requirements of Part One, Title II, Chapter 2 of the CRR for the purposes of prudential consolidation, a CRR consolidation entity for which the PRA is the consolidating supervisor must carry out a proportional consolidation according to the share of capital held of participations in institutions and financial institutions managed by an undertaking included in the consolidation together with one or more undertakings not included in the consolidation, where those undertakings' liability is limited to the share of capital they hold.

[Note: Art 18(4) of the CRR]

2.3

In applying the requirements of Part One, Title II, Chapter 2 of the CRR for the purposes of prudential consolidation, a CRR consolidation entity must carry out a proportional consolidation according to the share of capital held of any undertaking with whom it has an Article 18(5) relationship.

[Note: Art 18(5) of the CRR]

3.1

This Chapter applies where a firm is subject to a requirement obliging it to comply with 3.2 to 3.4 with respect to a third country banking and investment group of which it is a member.

[Note: Art 127 of the CRD]

3.2

A firm must comply with:

1. (1) those requirements of the CRR that apply to the firm on a consolidated basis; and
2. (2) rules that apply to the firm on a consolidated basis,

on the basis of the consolidated situation of the third country banking and investment group.

3.3

A firm must comply with Group Risk Systems in respect of the third country banking and investment group.

3.4

The scope of the CRR requirements and rules referenced in 3.2 and 3.3 is adjusted:

1. (1) to remove any provisions disapplying those rules for third country banking and investment groups;
2. (2) to remove all limitations relating to where a member of the third country banking and investment group is incorporated or has its head office; and
3. (3) so that the scope covers every member of the third country banking and investment group that would have been included in the scope of those rules if those members had their head offices, and were incorporated, in the UK.

4.1

A CRR consolidation entity must notify the PRA as soon as possible if it excludes a subsidiary or undertaking in which it has a participation from its consolidation group under the discretion in Article19(1) of the CRR.