Commission Delegated Regulation (EU) No 342/2014Dangos y teitl llawn

CHAPTER II U.K. TECHNICAL PRINCIPLES

Article 3 U.K. Elimination of multiple gearing and the intra-group creation of own funds

Own funds which result directly or indirectly from intra-group transactions shall not be included when calculating the supplementary capital adequacy requirements at the level of a financial conglomerate.

Article 4 U.K. Transferability and availability of own funds

1. Own funds recognised at the level of a regulated entity, that exceed those needed to meet sectoral solvency requirements as specified in Article 9, shall not be included in the calculation of the own funds of a financial conglomerate, or of the sum of the own funds of each regulated and non-regulated financial sector entity in a financial conglomerate, unless there is no current or foreseen practical or legal impediment to the transfer of the funds between entities in the financial conglomerate.

2. The entity referred to in the fifth subparagraph of Article 6(2) of Directive 2002/87/EC shall, when submitting the results of the calculation and the relevant data for the calculation referred to in that subparagraph to the coordinator, confirm and provide evidence to the coordinator that paragraph 1 is complied with.

Article 5 U.K. Sector specific own funds

1. Own funds referred to in paragraph 2 which are available at the level of a regulated entity shall be eligible for the coverage of risks arising from the sector that recognises those own funds, and shall not be taken into account as eligible for the coverage of risks of other financial sectors.

2. The own funds referred to in paragraph 1 are own funds that are not the following:

(a) Common Equity Tier 1, Additional Tier 1 or Tier 2 items within the meaning of Regulation (EU) No 575/2013;

(b) basic own-fund items of undertakings subject to the requirements of Directive 2009/138/EC where those items are classified in Tier 1 or in Tier 2 in accordance with Article 94(1) and (2) of that Directive.

Article 6 U.K. Deficit of own funds at the financial conglomerate level

1. Where there is a deficit of own funds at the financial conglomerate level, only own fund items that are eligible under the sectoral rules for both the banking sector and the insurance sector shall be used to meet that deficit.

2. The own funds referred to in paragraph 1 are the following:

(a) Common Equity Tier 1 capital as defined in Article 50 of Regulation (EU) No 575/2013;

(b) basic own-fund items where those items are classified in Tier 1 in accordance with Article 94(1) of Directive 2009/138/EC and the inclusion of those items is not limited by the delegated acts adopted in accordance with Article 99 of that Directive;

(c) Additional Tier 1 capital as defined in Article 61 of Regulation (EU) No 575/2013;

(d) basic own-fund items where those items are classified in Tier 1 in accordance with Article 94(1) of Directive 2009/138/EC and the inclusion of those items is limited by the delegated acts adopted in accordance with Article 99 of that Directive;

(e) Tier 2 capital as defined in Article 71 of Regulation (EU) No 575/2013; and

(f) basic own-fund items where those items are classified in Tier 2 in accordance with Article 94(2) of Directive 2009/138/EC.

3. Own funds items that are used to meet the deficit shall comply with Article 4(1).

Article 7 U.K. Consistency

The regulated entities or the mixed financial holding company in a financial conglomerate shall apply the calculation method in a consistent manner over time.

Article 8 U.K. Consolidation

In relation to insurance-led financial conglomerates, method 1 for calculating the group solvency of insurance and reinsurance undertakings, as laid down in Articles 230, 231 and 232 of Directive 2009/138/EC, shall be considered as equivalent to method 1 for calculating the supplementary capital adequacy requirements of the regulated entities in a financial conglomerate, as laid down in Annex I to Directive 2002/87/EC, provided that the scope of group supervision under Title III of Directive 2009/138/EC is not materially different from the scope of supplementary supervision under Chapter II of Directive 2002/87/EC.

F1 Article 9 U.K. Solvency requirement

1. Where the rules for the insurance sector are to be applied, the Solvency Capital Requirement referred to in Articles 100 and 218 of Directive 2009/138/EC including any capital add-on applied in accordance with Article 37 of that Directive, following from Article 216(4), Article 231(7), Article 232, Article 233(6), Article 238(2) and (3) of that Directive shall be considered to be the solvency requirements; for the purpose of the calculation of the supplementary capital adequacy requirements.

2. Where the rules for the banking or investment services sector are to be applied, own funds requirements as laid down in Chapter 1 of Title I of Part Three of Regulation (EU) No 575/2013 and requirements pursuant to that Regulation or to Directive 2013/36/EU to hold own funds in excess of those requirements, including a requirement arising from the internal capital adequacy assessment process in Article 73 of that Directive, any requirement imposed by a competent authority pursuant to Article 104(1)(a) of that Directive, the combined buffer requirement as defined in Article 128(6) of that Directive, and measures adopted pursuant to Articles 458 or 459 of Regulation (EU) No 575/2013 shall be considered to be the solvency requirements for the purpose of the calculation of the supplementary capital adequacy requirements.

Textual Amendments

F1 Art. 9 (as previously modified on IP completion day by the PRA's Technical Standards (Financial Conglomerates) (EU Exit) Instrument 2019 dated 9.4.2019) amended (30.11.2025) by The Financial Services and Markets Act 2023 (Capital Buffers and Macro-prudential Measures) (Consequential Amendments) Regulations 2025 (S.I. 2025/1023), regs. 1(2), 7(3)

Article 10 U.K. The financial conglomerate's own funds and solvency requirements

1. Subject to paragraphs 7, 8 and 9 of Article 14, the financial conglomerate's own funds and solvency requirements shall be calculated in accordance with the definitions and limits established in the relevant sectoral rules.

2. The own funds of asset management companies shall be calculated in accordance with Article 2(1)(l) of Directive 2009/65/EC of the European Parliament and of the Council(1). The solvency requirements of asset management companies shall be the requirements set out in Article 7(1)(a) of that Directive.

3. The own funds of alternative investment fund managers shall be calculated in accordance with Article 4(1)(ad) of Directive 2011/61/EU of the European Parliament and of the Council(2). The solvency requirements of alternative investment fund managers shall be the requirements set out in Article 9 of that Directive.

Article 11 U.K. Treatment of cross sector holdings

1. Where an entity in a banking- or investment-led financial conglomerate has a holding in a financial sector entity which belongs to the insurance sector and which is deducted pursuant to Articles 14(3) or 15(3) no supplementary capital adequacy requirement shall arise in respect of that holding at the level of the financial conglomerate.

2. Where the application of paragraph 1 results in a direct change in the expected loss amount under the Internal Ratings Based approach within the meaning of Chapter 3 of Title II of Part Three of Regulation (EU) No 575/2013, an amount equivalent to that change shall be added to the own funds of the financial conglomerate.

Article 12 U.K. Notional own funds and notional solvency requirements for non-regulated financial sector entities

1. Where a mixed financial holding company has a holding in a non-regulated financial sector entity, the notional own funds and the notional solvency requirements for that entity shall be calculated in accordance with the sectoral rules of the most important sector in the financial conglomerate.

2. For a non-regulated financial sector entity other than one referred to in paragraph 1, the notional own funds and the notional solvency requirements shall be calculated in accordance with the sectoral rules of the closest financial sector of the non-regulated financial sector entity. The determination of the closest financial sector shall be based on the range of activities of the relevant entity and the extent to which it carries out those activities. If it is not possible to clearly identify the closest financial sector, the sectoral rules of the most important sector in the financial conglomerate shall be used.

Article 13 U.K. Sectoral transitional and grandfathering arrangements

The sectoral rules applied in the calculation of the supplementary capital adequacy requirements shall include any transitional or grandfathering provisions that apply at sectoral level.

(1)

Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).

(2)

Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).