Guidance

SS11/13 – Internal Ratings Based (IRB) approaches

Chapter

Application of requirements to UK groups applying the IRB approach on a unified basis

Printed on: 06/11/2024

Rulebook at: 01/01/2022

2

Application of requirements to UK groups applying the IRB approach on a unified basis

2.1

The CRR provides that where the IRB approach is used on a unified basis by a UK group, the PRA is required to permit certain IRB requirements to be met on a collective basis by members of that group. The PRA considers that where a firm is reliant upon a rating system or data provided by another member of its group it will not meet the condition that it is using the IRB approach on a unified basis unless:

  1. (a) the firm only does so to the extent that it is appropriate, given the nature and scale of the firm’s business and portfolios and the firm’s position within the group;
  2. (b) the integrity of the firm’s systems and controls is not adversely affected;
  3. (c) the outsourcing of these functions meets the requirements of SYSC;[3] and
  4. (d) the abilities of the PRA and the lead regulator of the group to carry out their responsibilities under the CRR are not adversely affected.

(CRR Article 20(6))

  • 3. Senior Management Arrangements, Systems and Controls, as contained in the PRA Rulebook.
  • 01/01/2022

2.2

Prior to reliance being placed by a firm on a rating system, or data provided by another member of the group, the PRA expects the proposed arrangements to have been explicitly considered, and found to be appropriate, by the governing body of the firm.

  • 01/01/2022

2.3

If a firm uses a rating system or data provided by another group member, the PRA expects the firm’s governing body to delegate those functions formally to the persons or bodies that are to carry them out.

(CRR Article 20(6))

  • 01/01/2022