Article 411 Definitions
For the purposes of this Part, the following definitions apply:
- (1) ‘financial customer’ means a customer, including a financial customer belonging to a non-financial corporate group, which performs one or more of the Annex 1 activities as its main business, or which is one of the following:
- (a) a credit institution;
- (b) an investment firm;
- (c) a securitisation special purpose entity (SSPE);
- (d) a collective investment undertaking (CIU);
- (e) a non-open-ended investment scheme;
- (f) an insurance undertaking;
- (g) a reinsurance undertaking;
- (h) a financial holding company or mixed-financial holding company;
- (i) a financial institution;
- (j) a pension scheme arrangement as defined in point (10) of Article 2 of Regulation (EU) No 648/2012;
- (2) ‘retail deposit’ means a liability to a natural person or to an SME, where the natural person or the SME would qualify for the retail exposure class under the Standardised or IRB approaches for credit risk, or a liability to a company which is eligible for the treatment set out in Article 153(4), and where the aggregate deposits by that SME or company on a group basis do not exceed GBP 880,000;
- (3) ‘personal investment company’ means an undertaking or a trust, the owner or beneficial owner of which is either a natural person or a group of closely related natural persons which does not carry out any other commercial, industrial or professional activity and which was set up with the sole purpose of managing the wealth of the owner or owners, including ancillary activities such as segregating the owners' assets from corporate assets, facilitating the transmission of assets within a family or preventing a split of the assets after the death of a member of the family, provided that those ancillary activities are connected to the main purpose of managing the owners' wealth;
- (4) ‘deposit broker’ means a natural person or an undertaking that places deposits from third parties, including retail deposits and corporate deposits but excluding deposits from financial customers, with credit institutions in exchange of a fee;
- (5) ‘unencumbered assets’ (and ‘unencumbered’) means assets which are not subject to any legal, contractual, regulatory or other restriction preventing the institution from liquidating, selling, transferring, assigning or, generally, disposing of those assets via an outright sale or a repurchase agreement;
- (6) ‘non-mandatory overcollateralisation’ means any amount of assets which the institution is not obliged to attach to a covered bond issuance by virtue of legal or regulatory requirements, contractual commitments or for reasons of market discipline, including in particular where the assets are provided in excess of the minimum legal, statutory or regulatory overcollateralisation requirement applicable to the covered bonds under the national law of the United Kingdom or a third country;
- (7) ‘asset coverage requirement’ means the ratio of assets to liabilities as determined in accordance with the national law of the United Kingdom or a third country for credit enhancement purposes in relation to covered bonds;
- (8) ‘margin loans’ means collateralised loans extended to customers for the purpose of taking leveraged trading positions;
- (9) ‘derivative contracts’ means the derivative contracts listed in Annex II of the CRR and credit derivatives;
- (10) ‘stress’ (and ‘stressed’) shall, unless the context otherwise indicates, mean a sudden or severe deterioration in the solvency or liquidity position of an institution due to changes in market conditions or idiosyncratic factors as a result of which there is a significant risk that the institution becomes unable to meet its commitments as they become due within the next 30 days;
- (11) ‘level 1 assets’ means assets of extremely high liquidity and credit quality as referred to in Article 10 of Chapter 2 of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook;
- (12) ‘level 2 assets’ means assets of high liquidity and credit quality and further subdivided into level 2A and 2B assets in accordance with Articles 11 and 12 of Chapter 2 of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook;
- (13) ‘liquidity buffer’ means the amount of level 1 assets and level 2 assets that an institution holds in accordance with Chapter 2 of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook;
- (14) ‘net liquidity outflows’ means the amount which results from deducting an institution's liquidity inflows from its liquidity outflows;
- (15) ‘reporting currency’ means pounds sterling unless the institution’s annual accounts are prepared in a different currency, in which case the institution may use that different currency as their reporting currency;
- (16) ‘factoring’ means a contractual agreement between a business (the ‘assignor’) and a financial entity (the ‘factor’) in which the assignor assigns or sells its receivables to the factor in exchange for the factor providing the assignor with one or more of the following services with regard to the receivables assigned:
- (a) an advance of a percentage of the amount of the assigned receivables, generally short term, uncommitted and without automatic roll-over;
- (b) receivables management, collection and credit protection, whereby, in general, the factor administers the assignor's sales ledger and collects the receivables in the factor's own name.
- For the purposes of Title IV (The Net Stable Funding Ratio), factoring shall be treated as trade finance;
- (17) ‘committed credit or liquidity facility’ means:
- (a) a ‘committed credit facility’ which is a credit facility that is irrevocable or conditionally revocable; or
- (b) a ‘committed liquidity facility’ which is a liquidity facility that is irrevocable or conditionally revocable;
- (18) ‘clearing member’ means a clearing member as defined in point (14) of Article 2 of Regulation (EU) No 648/2012.
[Note: This rule corresponds to Article 411 of the CRR as it applied immediately before revocation by the Treasury.]
- 01/01/2022