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 regulation 10 of The Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014) the rate:

1. (a) expressed as a percentage of total risk exposure amount set by the FPC; 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:

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

FPC

means the Financial Policy Committee

MDA

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

relevant credit exposures

means 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.