Prudential Regulation Authority Rulebook

1.1

The changes to this rule are effective from 23:00 on 31/12/2020.

Unless otherwise stated, this Part applies to:

1. (1) every firm that is a UK bank or a building society that, on the firm’s last accounting reference date, had retail deposits equal to or greater than £50 billion either on:
1. (a) an individual basis;
2. (b) if the firm is a UK parent institution, on the basis of its consolidated situation; or
3. (c) if the firm is controlled by a UK parent financial holding company or by a UK parent mixed financial holding company and the PRA is responsible for supervision of that holding company on a consolidated basis, on the basis of the consolidated situation of that holding company; and
2. (2) a ring-fenced body that is a member of a group containing a firm falling within 1.1(1).

1.2

In this Part, the following definitions shall apply:

capital plan

means the plan described in Chapter 6.

central bank claims

means the following exposures of a firm to a central bank, provided these are denominated in the national currency of such central bank:

1. (1) banknotes and coins constituting legal currency in the jurisdiction of the central bank;
2. (2) reserves held by a firm at the central bank; and
3. (3) any assets representing debt claims on the central bank with a maturity of no longer than 3 months.

countercyclical leverage ratio buffer

means the amount of common equity tier 1 capital a firm must calculate in accordance with 4.1 and 4.2.

deposit

has the meaning given in 30, Part 1, Annex V (Reporting on financial information) for the purposes of the European Banking Authority’s Implementing Technical Standards amending the Commission’s Implementing Regulation (EU) No 680/2014 on supervisory reporting under Regulation (EU) No 575/2013 of the European Parliament and of the Council.

FPC

means the Financial Policy Committee of the Bank of England.

leverage ratio

means a firm’s tier 1 capital divided by its total exposure measure, with this ratio expressed as a percentage.

retail deposit

means deposits from “households” as defined in 35(f), Part 1, Annex V (Reporting on financial information) for the purposes of the European Banking Authority’s Implementing Technical Standards amending the Commission’s Implementing Regulation (EU) No 680/2014 on supervisory reporting under Regulation (EU) No 575/2013 of the European Parliament and of the Council.

tier 1 capital

has the meaning given by Article 25 of the CRR except that:

1. (1) an additional tier 1 capital instrument can only be counted as tier 1 capital if it either:
1. (a) converts into common equity tier 1 capital; or
2. (b) writes down,
2. when the common equity tier 1 capital ratio of the firm falls below a level equal to either:
1. (a) 7%; or
2. (b) a level higher than 7%,
3. as specified in the provisions governing the instrument; and
4. (2) instruments that qualify for grandfathering under Article 483 of the CRR can be counted as tier 1 capital.

total exposure measure

has the meaning given by Article 429(4) of the CRR, as amended by the Commission Delegated Regulation (EU) 2015/62, save that a central bank claim of a firm shall be netted off against a deposit accepted by the firm, provided that:

1. (1) the central bank claim and deposit are denominated in the same currency; and
2. (2) where applicable, the date of contractual maturity of the central bank claim is the same as, or is before, the date of contractual maturity of the deposit.

1.3

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