| | | 1Application |
| 9.1 | G | This section applies to a BIPRU firm that is a bank or building society for which the FSA has given: |
| | | (1) | (in the case of a building society) a threshold ratio under IPRU(BSOC); or |
| | | (2) | (in the case of a bank) an individual capital ratio under IPRU(BANK); |
| | | that was in effect on 31 December 2006 but to which the FSA has not yet given individual capital guidance. |
| | | Duration |
| 9.2 | G | This section applies to a firm until it receives individual capital guidance. |
| 9.3 | G | GENPRU TP 9.4G - GENPRU TP 9.6G only apply until 31 December 2007. Thereafter (if they do not already apply) GENPRU TP 9.7G - GENPRU TP 9.10G apply. |
| | | Pre 2007 capital requirements |
| 9.4 | G | GENPRU TP 9.5G - GENPRU TP 9.6G apply if, and for as long as, a firm applies the treatment in BIPRU TP 3 (Pre CRD capital requirements applying on a solo basis during 2007) to all its exposures. |
| 9.5 | G | If GENPRU TP 9.4G applies, any threshold ratio or individual capital ratio remains in force. However compliance with such ratios should be measured by reference to capital resources. |
| 9.6 | G | Where necessary, a firm should apply the adjustment set out in section 4.1.3 of chapter CO of IPRU(BANK) (CAD banks) as it stood on 31 December 2006 to its trading book capital requirements. |
| | | BIPRU capital requirements |
| 9.7 | G | GENPRU TP 9.8G - GENPRU TP 9.10G apply to a firm if GENPRU TP 9.5G - GENPRU TP 9.6G do not apply. |
| 9.8 | G | Any threshold ratio or individual capital ratio remains in force adjusted as follows: |
| | | (1) | the firm should work out the percentage of its capital resources requirement as at the date in GENPRU TP 9.10G represented by the absolute amount in GENPRU TP 9.9G; and |
| | | (2) | the firm should hold capital resources of an amount at least equal to the percentage specified in (1) of its capital resources requirement from time to time. |
| 9.9 | G | The absolute amount referred to in GENPRU TP 9.8G is: |
| | | (1) | (if GENPRU TP 9.7G - GENPRU TP 9.10G apply to the firm on 1 January 2007) the amount of capital resources it had to hold under IPRU on 31 December 2006 in order to meet the ratio referred to in GENPRU TP 9.1G; and |
| | | (2) | (in any other case) the amount of capital resources it had to hold immediately prior to the date in GENPRU TP 9.10G in order to meet the ratio referred to in GENPRU TP 9.1G. |
| 9.10 | G | The date referred to in GENPRU TP 9.8G and GENPRU TP 9.9G is: |
| | | (1) | (if GENPRU TP 9.9G(1) applies) 1 January 2007; and |
| | | (2) | (if GENPRU TP 9.9G(2) applies) the date on which GENPRU TP 9.7G - GENPRU TP 9.10G first apply to the firm. |
| 9.11 | G | The following illustrates how GENPRU TP 9.8G - GENPRU TP 9.10G work. This example relates to a bank to which GENPRU TP 9.7G - GENPRU TP 9.10G apply from 1 January 2007. The example is as follows (all figures in £millions): |
| | | (1) | as at 31 December 2006: |
| | | | (a) | the bank has risk-weighted assets of £1250; |
| | | | (b) | its Pillar 1 capital resources requirement was £100 (8% of £1250); |
| | | | (c) | its individual capital ratio was 10%; and |
| | | | (d) | its capital resources requirement expressed as an absolute amount and including the individual capital ratio is £125; |
| | | (2) | on 1 January 2007 its capital resources requirement is £80; |
| | | (3) | the result is that the new individual capital ratio is 156.25% (£125m/£80m); and |
| | | (4) | its capital resources requirement expressed as an absolute amount and including the individual capital ratio remains at £125 despite the fall in the Pillar 1 charge. |
| 9.12 | G | Continuing the example, say that the bank's capital resources requirement falls to £70 on 31 July 2007. Its capital resources requirement, expressed as an amount and including the individual capital ratio, now falls to £109.375. |
| | | Adjustments |
| 9.13 | G | No adjustment should be made to take into account differences between the calculation of capital resources under IPRU and of capital resources. |
| | | Consolidation |
| 9.14 | G | This section also applies to threshold ratios and individual capital ratios that apply on a consolidated basis. |
