Prudential Regulation Authority Rulebook

1.

Institutions shall multiply liabilities resulting from the institution's own operating expenses by 0%.

2.

Institutions shall multiply liabilities resulting from secured lending and capital market-driven transactions as defined in point (3) of Article 192 by:

1. (a) 0% up to the value of the liquid assets in accordance with Article 418 if they are collateralised by assets that would qualify as liquid assets in accordance with Article 416;
2. (b) 100% over the value of the liquid assets in accordance with Article 418, if they are collateralised by assets that would qualify as liquid assets in accordance with Article 416;
3. (c) 100% if they are collateralised by assets that would not qualify as liquid assets in accordance with Article 416, with the exception of transactions covered by points (d) and (e) of this paragraph;
4. (d) 25% if they are collateralised by assets that would not qualify as liquid assets in accordance with Article 416 and the lender is the central government of the United Kingdom, a public sector entity of the United Kingdom or a multilateral development bank. Public sector entities that receive that treatment shall be limited to those that have a risk weight of 20% or lower in accordance with Chapter 2, Title II of Part Three of the CRR;
5. (e) 0% if the lender is a central bank.

3.

Institutions shall multiply liabilities resulting from deposits that have to be maintained:

1. (a) by the depositor in order to obtain clearing, custody or cash management or other comparable services from the institution;
2. (c) by the depositor in the context of an established operational relationship other than that mentioned in point (a);
3. (d) by the depositor to obtain cash clearing and central credit institution services and where the credit institution belongs to a network in accordance with legal or statutory provisions,

by 5% in the case of point (a) to the extent to which they are covered by the UK deposit guarantee scheme or an equivalent deposit guarantee scheme in a third country and by 25% otherwise.

Deposits from credit institutions placed at central credit institutions that are considered as liquid assets in accordance with Article 416(1)(f) shall be multiplied by 100% outflow rate.

4.

Clearing, custody, cash management or other comparable services referred to in points (a) and (d) of paragraph 3 shall only cover those services to the extent that they are rendered in the context of an established relationship on which the depositor has substantial dependence. Those services shall not merely consist of correspondent banking or prime brokerage services, and the institutions shall have evidence that the client is unable to withdraw amounts legally due over a 30-day time horizon without compromising its operational functioning.

5.

Institutions shall multiply liabilities resulting from deposits by clients that are not financial customers to the extent they do not fall under paragraphs 3 and 4 by 40% and shall multiply the amount of these liabilities covered by the UK deposit guarantee scheme or an equivalent deposit guarantee scheme in a third country by 20%.

6.

Institutions shall take outflows and inflows expected over the 30-day horizon from the contracts listed in Annex II of the CRR into account on a net basis across counterparties and shall multiply them by 100% in the case of a net outflow. Net basis shall mean also net of collateral to be received that qualifies as liquid assets under Article 416.

7.

Institutions shall separately report other liabilities that do not fall under paragraphs 1 to 5.

8.

An institution may apply to the competent authority for permission to apply a lower outflow percentage to the liabilities referred to in paragraph 7 on a case-by-case basis with a counterparty who:

1. (a) is any of the following:
1. (i) a UK parent institution or subsidiary institution of the institution or another subsidiary of the same parent institution;
2. (ii) linked to the institution by a common management relationship; or
3. (iii) the central institution or a member of a network compliant with point (d) of Article 400 (2);
2. (b) applies a corresponding symmetric or more conservative inflow by way of derogation from Article 425; and
3. (c) is established in the United Kingdom.

[Note: This is a permission under section 144G of FSMA to which Part 8 of the Capital Requirements Regulations applies]

[Note: This rule corresponds to Article 422 of the CRR as it applied immediately before revocation by the Treasury.]