OpenLegislation

Regulation 18 Determination by PRA of buffer rates for individual relevant O-SII

Original text. Later amendments are not shown.

(1)

The PRA may, in relation to each relevant O-SII, determine—

(a)

whether or not to set a buffer rate for the relevant O-SII, and

(b)

where it sets a buffer rate, the level of the rate,

by applying the steps set out in paragraph (2).

(2)

The steps set out in this paragraph are—

  • Step 1: determining the level of consolidation

    The PRA must choose one of the following bases on which to apply the criteria specified in the FPC framework to the relevant O-SII—

    1. (a)

      an individual basis,

    2. (b)

      a sub-consolidated basis, or

    3. (c)

      a consolidated basis.

  • Step 2: deriving a framework buffer rate from the FPC framework

    The PRA must derive a buffer rate from the FPC framework for the relevant O-SII (“a framework buffer rate”) by—

    1. (a)

      applying the methodology of the FPC framework to obtain a score for the relevant O-SII, and

    2. (b)

      ascertaining to what buffer rate the score corresponds under the FPC framework.

  • Step 3: setting a buffer rate for a relevant O-SII based on supervisory judgment

    The PRA may, if it makes a supervisory judgment that it is appropriate to do so—

    1. (a)

      set a buffer rate for a relevant O-SII, even if it has derived a framework buffer rate for the institution of 0% under Step 2,

    2. (b)

      set a buffer rate for a relevant O-SII which is different to the framework buffer rate derived for the institution under Step 2, or

    3. (c)

      set no buffer rate for a relevant O-SII, even if it has derived a framework buffer rate for the institution of other than 0% under Step 2.

  • Step 4: setting a buffer rate for relevant O-SIIs based on framework buffer rate

    Unless the PRA exercises the discretion in Step 3—

    1. (a)

      where the PRA derives a framework buffer rate under Step 2 of 0% for the relevant O-SII, the PRA may not set a buffer rate for the institution, and

    2. (b)

      where the PRA derives a framework buffer rate under Step 2 other than 0% for the relevant O-SII, the PRA must set the rate so derived as the buffer rate for the institution.

(3)

Where the PRA sets a buffer rate under paragraph (a) or (b) of Step 3 of this regulation, the rate must be 1%, 1.5%, 2%, 2.5% or 3%.