Prudential Regulation Authority Rulebook

2.1

A financial conglomerate means a consolidation group that is a financial conglomerate when assessed against the decision tree in Annex 1.

[Note: Art 2(14) and Art 3(1) to 3(3) of the Financial Groups Directive]

2.2

A consolidation group is not prevented from being a financial conglomerate because it is part of a wider:

1. (1) consolidation group; or
2. (2) financial conglomerate; or
3. (3) group of persons linked in some other way.

[Note: Art 2(12) and Art 2(14) of the Financial Groups Directive]

2.3

For the purpose of the definition of financial conglomerate, there are two financial sectors as follows:

1. (1) the banking sector and the investment services sector, taken together; and
2. (2) the insurance sector.

[Note: Art 2(8) and second paragraph of Art 3(2) of the Financial Groups Directive]

2.4

For the purposes of Annex 1:

1. (1) a mixed financial holding company is outside the overall financial sector for the purposes of the tests set out in the boxes entitled Threshold Test 1, Threshold Test 2 and Threshold Test 3 in Annex 1;
2. (2) determining whether the tests set out in the boxes entitled Threshold Test 2 and Threshold Test 3 in Annex 1 are passed is based on a consideration of the consolidated and/or aggregated activities of the members of the consolidation group within the insurance sector and the consolidated and/or aggregated activities of the members of the consolidation group within the banking sector and the investment services sector; and
3. (3) in determining the investment services sector for the purposes of the tests in the boxes entitled Threshold Test 1, Threshold Test 2 and Threshold Test 3, any investment firm that does not fall within the definition in Article 4(1)(2) of the CRR is excluded.

[Note: Art 2(4) of the Financial Groups Directive]

2.5

In respect of a financial conglomerate in relation to which a financial conglomerate notification has been issued, the figures in Annex 1 are altered as follows:

1. (1) the figure of 40% in the box titled Threshold Test 1 is replaced by 35%;
2. (2) the figure of 10% in the box title Threshold Test 2 is replaced by 8%; and
3. (3) the figure of six billion Euro in the box titled Threshold Test 3 is replaced by five billion Euro.

[Note: Art 3(6) of the Financial Groups Directive]

2.6

The alteration in 2.5 applies to a financial conglomerate only during the period that:

1. (1) begins when the financial conglomerate would otherwise have stopped being a financial conglomerate because it does not meet one of the unaltered thresholds referred to 2.5; and
2. (2) covers the three years following that date.

[Note: Art 3(6) of the Financial Groups Directive]

2.7

The calculations referred to in Annex 1 regarding the balance sheet must be made on the basis of the aggregated balance sheet total of the members of the consolidation group, according to their annual accounts. For the purposes of this calculation, undertakings in which a participation is held must be taken into account as regards the amount of their balance sheet total corresponding to the aggregated proportional share held by the consolidation group. However, where consolidated accounts are available, they must be used instead of aggregated accounts.

[Note: Art 3(7) of the Financial Groups Directive]

2.8

The solvency and capital adequacy requirements referred to in Annex 1 must be calculated in accordance with the provisions of the relevant sectoral rules.

[Note: Art 3(7) of the Financial Groups Directive]