Regulation 34 Supervisory powers: own funds

United Kingdom

(1)

The PRA F1... must require an institution to hold own funds in excess of—

(a)

the requirements of F2Directive 2013/36/EU UK law which implemented Chapter 4 of Title 7 of the capital requirements directive; and

F3(b)

the requirements of the capital requirements regulation and CRR rules relating to risks or elements of risks not covered by Article 1 of the capital requirements regulation or CRR rules;

in the circumstances mentioned in paragraph (2).

(2)

The circumstances referred to in paragraph (1) are—

(a)

an institution does not meet the requirements set out in F4Directive 2013/36/EU UK law which implemented Articles 73 and 74 of the capital requirements directive or in Article 393 of the capital requirements regulation;

(b)

risks or elements of risks are not covered by the own funds requirements set out in Directive 2013/36/EU UK law which implemented Chapter 4 of Title 7 of the capital requirements directive F5, the capital requirements regulation or CRR rules;

(c)

the sole application of other administrative measures is unlikely to improve the institution's arrangements, processes, mechanisms and strategies sufficiently within an appropriate timeframe;

(d)

F6either a SREP or an internal model review reveals that non-compliance with the requirements for the F7applicable internal approaches will likely lead to inadequate own funds requirements;

(e)

the risks are likely to be underestimated despite compliance with the applicable requirements of F8Directive 2013/36/EU UK law F9, the capital requirements regulation or CRR rules ; or

(f)

an institution reports to the competent authority in accordance with Article 377(5) of the capital requirements regulation that the stress test results referred to in that Article materially exceed its own funds requirement for the correlation trading portfolio.

(3)

For the purposes of determining the appropriate level of own funds on the basis of F10a SREP, the PRA F11... must assess whether any imposition of an additional own funds requirement in excess of the own funds requirement is necessary to capture risks to which an institution is or might be exposed, taking into account the following:

(a)

the quantitative and qualitative aspects of the institution's assessment process referred to in F12Directive 2013/36/EU UK law which implemented Article 73 of the capital requirements directive;

(b)

the institution's arrangements, processes and mechanisms referred to in Directive 2013/36/EU UK law which implemented Article 74 of the capital requirements directive; F13and

(c)

the outcome of F14the SREP or internal model review; F15...

F16(d)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17(3A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F18(4)

In this Part—

“internal model review” means a review carried out under regulation 34B;
“SREP” means the supervisory review and evaluation process detailed in regulation 34A.

Annotations

Textual amendments

F1: Words in reg. 34(1) omitted (1.1.2022) by virtue of The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(7)(a)(i)
F2: Words in reg. 34(1)(a) inserted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(a) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F3: Reg. 34(1)(b) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(7)(a)(ii)
F4: Words in reg. 34(2)(a)(b) inserted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(b) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F5: Words in reg. 34(2)(b) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(7)(b)(i)
F6: Words in reg. 34(2)(d) substituted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(c)(i) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F7: Words in reg. 34(2)(d) substituted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(c)(ii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F8: Words in reg. 34(2)(e) substituted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(d) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F9: Words in reg. 34(2)(e) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(7)(b)(ii)
F10: Words in reg. 34(3) substituted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(e) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F11: Words in reg. 34(3) omitted (1.1.2022) by virtue of The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(7)(c)
F12: Words in reg. 34(3)(a)(b) inserted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(f) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F13: Word in reg. 34(3)(b) inserted (29.12.2020) by The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1406), regs. 1(4), 7(a)(i)
F14: Words in reg. 34(3)(c) substituted (31.12.2020) by The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(g) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)
F15: Word in reg. 34(3)(c) omitted (29.12.2020) by virtue of The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1406), regs. 1(4), 7(a)(ii)
F16: Reg. 34(3)(d) omitted (29.12.2020) by virtue of The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1406), regs. 1(4), 7(a)(iii)
F17: Reg. 34(3A) omitted (1.1.2022) by virtue of The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(7)(d)
F18: Reg. 34(4) inserted (31.12.2020) by virtue of The Capital Requirements (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1401), regs. 1(3), 20(h) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

Notes on the whole SI

Textual amendments

F1: 2000 c. 8. Section 349(2) was amended by section 41 of, and paragraphs 19(1) and (2) of Schedule 12 to, the Financial Services Act 2012 (c. 21); paragraphs 14(1)(b), 17(c), 18 and 22 of Schedule 3 were amended by section 12 of, and paragraphs 1, 3, 7, 8 and 14 of Schedule 4 to, the Financial Services Act 2012; paragraph 14(1)(b) was also amended by S.I. 2003/1473 and S.I. 2003/2066.

Notes on Part 7

Textual amendments

F1: Words in Pt. 7 heading omitted (1.1.2022) by virtue of The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(6)