Prudential Regulation Authority Rulebook

1.1

This Part, save for Chapter 4, applies to Article 109 undertakings and references to a firm in Chapters 2-3 should, as appropriate, be read to include all Article 109 undertakings.

1.1A

Chapter 4 applies to every firm that is a CRR firm.

1.2

In this Part the following definitions shall apply:

capital conservation buffer

means the amount of common equity tier 1 capital a firm must calculate in accordance with Chapter 2.

combined buffer

means the sum of

1. (a) the capital conservation buffer; and
2. (b) the countercyclical capital buffer.

countercyclical buffer rate

means (in accordance with point (7) of Article 128 of the CRD) the rate:

1. (a) expressed as a percentage of total risk exposure amount set by the FPC or an EEA countercyclical buffer authority; or
2. (b) expressed in terms equivalent to a percentage of total risk exposure amount set by a third country countercyclical buffer authority;

that a firm must apply in order to calculate its countercyclical capital buffer.

countercyclical capital buffer

means the amount of common equity tier 1 capital a firm must calculate in accordance with Chapter 3.

distribution in connection with common equity tier 1 capital

includes (in accordance with Article 141(10) of the CRD):

1. (a) a payment of cash dividends;
2. (b) a distribution of fully or partly paid bonus shares or other capital instruments referred to in Article 26(1)(a) of the CRR;
3. (c) a redemption or purchase by an institution of its own shares or other capital instruments referred to in Article 26(1)(a) of the CRR;
4. (d) a repayment of amounts paid up in connection with capital instruments referred to in Article 26(1)(a) of the CRR; and
5. (e) a distribution of items referred to in points (b) to (e) of article 26(1) of the CRR

EEA countercyclical buffer authority

means the authority or body of an EEA State other than the UK designated for the purpose of Article 136 of the CRD with responsibility for setting the countercyclical buffer rate for that EEA State or the European Central Bank when it carries out the task of setting a countercyclical buffer rate for an EEA State conferred on it by Article 5(2) of Council Regulation (EU) No. 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.

FPC

means the Financial Policy Committee

MDA

means maximum distributable amount calculated in accordance with 4.3(4).

parent financial holding company in a Member State

means (in accordance with point (26) of Article 3(1) of the CRD) a financial holding company which is not itself a subsidiary of an institution authorised in the same EEA State, or of a financial holding company or mixed financial holding company set up in the same EEA State.

parent institution in a Member State

means (in accordance with point (24) of Article 3(1) of the CRD) an institution authorised in an EEA State which has an institution or financial institution as subsidiary or which holds a participation in such an institution or financial institution, and which is not itself a subsidiary of another institution authorised in the same EEA State or of a financial holding company or mixed financial holding company set up in the same EEA State.

parent mixed financial holding company in a Member State

means (in accordance with point (28) of Article 3(1) of the CRD) a mixed financial holding company which is not itself a subsidiary of an institution authorised in the same EEA State, or of a financial holding company or mixed financial holding company set up in the same EEA State.

relevant credit exposures

means (in accordance with Article 140(4) of the CRD) exposures other than those referred to in points (a) to (f) of Article 112 of the CRR that are subject to:

1. (a) the own funds requirements for credit risk under Part Three, Title II of the CRR; or
2. (b) where the exposure is held in the trading book, own funds requirements for specific risk under Part Three, Title IV, Chapter 2 of the CRR or incremental default and migration risk under Part Three, Title IV, Chapter 5 of the CRR; or
3. (c) where the exposure is a securitisation, the own funds requirements under Part Three, Title II, Chapter 5 of the CRR.

third country countercyclical buffer authority

means the authority of a third country empowered by law or regulation with responsibility for setting the countercyclical buffer rate for that third country.

total risk exposure amount

means the total risk exposure amount of a firm calculated in accordance with Article 92(3) of the CRR.

1.3

Unless otherwise defined, any italicised expression used in this Part and in the CRR has the same meaning as in the CRR.