• Qualifying AT1 and T2 Capital issued by a Special Purpose Entity

    • PRU 3.13.5 PRU 3.13.5

      AT1 and T2 Capital instruments issued by an SPE, and the related retained earnings and Share premium accounts, may be included in qualifying AT1 or T2 Capital or qualifying Capital Resources, as applicable, only where the following conditions are met:

      (a) the SPE issuing those instruments is included fully in the Financial Group to which the Authorised Person belongs;
      (b) the instruments, and the related retained earnings and Share premium accounts, are included in qualifying AT1 Capital only where the conditions laid down in Rule 3.11.3(1) are satisfied;
      (c) the instruments, and the related retained earnings and Share premium accounts, are included in qualifying T2 Capital only where the conditions laid down in Rule 3.12.3(1) are satisfied; and
      (d) the only asset of the SPE is its investment in the Capital Resources of any of its Parents or their Subsidiaries, which are included fully in the Financial Group to which the Authorised Person belongs, the form of which satisfies the relevant conditions laid down in Rule 3.11.3(1) or Rule 3.12.3(1), as applicable.

      • Guidance

        If the Regulator considers the assets of an SPE to be minimal and insignificant for such an entity, the Regulator may consider waiving the condition specified in Rule 3.13.5(d).

    • PRU 3.13.6

      An Authorised Person must determine the amount of qualifying T1 Capital of a Subsidiary that is included in consolidated T1 Capital of the Authorised Person's Financial Group by subtracting from the qualifying T1 Capital of that Subsidiary the result of multiplying the amount referred to in (a) by the percentage referred to in (b):

      (a) the lesser of the following:
      (i) the amount of T1 Capital of that Subsidiary required to meet the sum of the Subsidiary's T1 Capital requirement (on a solo basis) of 8.0% of its Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7, and its Combined Buffer Requirement; or
      (ii) the amount of consolidated T1 Capital that relates to the Subsidiary that is required on a consolidated basis to meet the sum of its Financial Group's T1 Capital requirement of 8.0% of the Total Risk Exposure Amount, calculated in accordance with Rule 3.5.7, and its Combined Buffer Requirement;
      (b) the qualifying T1 Capital of the Subsidiary expressed as a percentage of all T1 Capital instruments of that Subsidiary plus the related retained earnings and Share premium accounts.