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The Capital Requirements Regulations 2013

Type Statutory-Instrument

Publication 2013-12-09

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

articles 2

Reform history JSON API PDF

Made: 9th December 2013

Laid before Parliament: 10th December 2013

Coming into force in accordance with regulation 1

The Treasury are designated for the purposes of section 2(2) of the European Communities Act 1972 in relation to financial services.

The Treasury, in exercise of the powers conferred by—section 2(2) of the European Communities Act 1972; andsections 349(1)(b), 349(2), 349(3) and 428(3) of, and paragraphs 13(1)(b)(iii), 14(1)(b), 17(a), 17(b), 17(c), 18 and 22 of Schedule 3 to, the Financial Services and Markets Act 2000 ;

The Treasury, in exercise of the powers conferred by—

section 2(2) of the European Communities Act 1972; and

sections 349(1)(b), 349(2), 349(3) and 428(3) of, and paragraphs 13(1)(b)(iii), 14(1)(b), 17(a), 17(b), 17(c), 18 and 22 of Schedule 3 to, the Financial Services and Markets Act 2000 ;

make the following Regulations:

PART 1 — Introductory provisions

Citation, commencement and expiry

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(1) These Regulations may be cited as the Capital Requirements Regulations 2013.

(2) Subject to paragraph (3), these Regulations come into force on 1st January 2014.

(3) The Regulations specified in the first column of Schedule 1 (CRD transitional arrangements) come into force on the dates specified in the second column or cease to have effect on the dates specified in the third column.

Interpretation

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(1) In these Regulations—

“capital requirements regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 ;

“on a consolidated basis” means on the basis of the consolidated situation;

“consolidated situation” means the situation that results from an entity being treated, for the purposes of the capital requirements regulation or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity;

“CRR rules” has the meaning given in section 144A of FSMA;

“FSMA” means the Financial Services and Markets Act 2000;

“group” means a group whose members include one or more institutions;

“Specified EU Regulations under the Capital Requirements Regulation” means the EU regulations or parts of EU regulations which form part of assimilated law and which are specified in paragraphs 78 to 83 and 126 to 168, in Schedule 1 to the Financial Regulators' Powers (Technical Standards) (Amendment etc.) (EU Exit) Regulations.

(2) Except as provided by paragraph (1)—

(a) any expression used in these Regulations which is defined in Article 4 (definitions) of the capital requirements regulation ... has the meaning which it is given in that Article ;

(b) any other expression used in these Regulations which is defined in section 417 (definitions) of FSMA has the meaning given by that section .

(3) Any reference in these Regulations to any EU regulation, EU decision or EU tertiary legislation (within the meaning of section 20 of the European Union (Withdrawal) Act 2018) is, unless the contrary intention appears, to be treated as a reference to that EU regulation, EU decision or EU tertiary legislation as it forms part of assimilated law.

PART 2 — Capital Requirements Regulations 2006: revocation

Capital Requirements Regulations 2006: revocation

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The Capital Requirements Regulations 2006 are revoked.

PART 3 — Designation of competent authorities

Main provisions of the capital requirements regulation and Directive 2013/36/EU UK law

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For the purposes of every provision of Directive 2013/36/EU UK law and the capital requirements regulation—

(a) the PRA is responsible for—

(i) all the functions of a competent authority in respect of PRA-authorised persons and financial holding companies and mixed financial holding companies approved or designated by the PRA under—

(aa) Part 12B of FSMA, or

(bb) regulation 5 of the Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020;

(ii) the application of Article 124(2) and Article 164(6) of the capital requirements regulation;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital buffers and Article 458 of the capital requirements regulation

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PART 4 — PRA and FCA: cooperation and co-ordination

Co-operation within the European System of Financial Supervision

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Co-operation with EBA

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Information gathering, planning and co-ordination duties

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Requirement to consult other competent authorities: major sanctions or exceptional measures

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Emergency situations: notification requirements

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Collaboration concerning supervision of cross-border institutions

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On-the-spot checks and inspections: during CRD transitional period

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On-the-spot checks or inspections: after CRD transitional period

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On-the-spot checks and inspections: powers of EEA competent authorities

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Significant branches: UK is the host EEA State

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Significant branches: UK is the home EEA State or EEA consolidating supervisor

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Duties to notify EBA and EIOPA

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PART 5 — Publication of information by PRA and FCA

General disclosures required of PRA and FCA

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Specific disclosures required of PRA and FCA

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PART 6 — Consolidated supervision

Determination of the consolidating supervisor

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Assessment of equivalence of consolidated supervision by supervisory authorities in third countries

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(1) In this regulation, a “relevant institution” is an institution which satisfies the following conditions—

(a) the institution is authorised by the PRA ...

(b) the parent undertaking of the institution is an institution, financial holding company or mixed financial holding company whose head office is not located in the United Kingdom;

(d) the PRA ... would (but for paragraph (4)) be responsible for supervision of the institution on a consolidated basis; and

(e) either—

(i) the parent undertaking of the institution, or any regulated entity established in the United Kingdom which is a member of the same group as the institution, has requested the assessment referred to in paragraph (2) be carried out; or

(ii) the PRA ... has decided on its own initiative to carry out that assessment.

(2) The PRA must assess whether a relevant institution is subject to supervision on a consolidated basis by a supervisory authority of a country outside the United Kingdom which is equivalent to the standard of supervision on a consolidated basis applied by the PRA in accordance with Directive 2013/36/EU UK law, the capital requirements regulation and CRR rules.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Where the PRA concludes that a relevant institution is not subject to equivalent supervision in accordance with paragraph (2), the PRA may apply—

(a) the requirements of Directive 2013/36/EU UK law, the capital requirements regulation and CRR rules to the institution, amended as necessary; or

(b) other appropriate supervisory techniques, which must be designed to achieve the objectives of supervision on a consolidated basis ...

(5) The other appropriate supervisory techniques referred to in paragraph (4) may include a requirement on the institution to establish a financial holding company or mixed financial holding company with its head office in the United Kingdom, so that supervision on a consolidated basis may be applied in relation to the consolidated situation of that holding company.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Co-ordination and co-operation arrangements

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Co-ordination of supervisory activities by the EEA consolidating supervisor

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The Bank's general duties

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Exchange of information

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Obtaining information already disclosed

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Verification of information by a competent authority in another EEA State

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Requirement to establish list of holding companies

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Joint decisions on own funds: PRA or FCA is the EEA consolidating supervisor

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Joint decisions on own funds: PRA or FCA is not the EEA consolidating supervisor

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Joint decision on liquidity: PRA or FCA is the EEA consolidating supervisor

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Joint decision on liquidity: PRA or FCA is not the EEA consolidating supervisor

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Colleges of supervisors

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PART 7 — Exercise of supervision by the PRA ...

Supervisory powers: own funds

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(1) The PRA ... must require an institution to hold own funds in excess of—

(a) the requirements of Directive 2013/36/EU UK law which implemented Chapter 4 of Title 7 of the capital requirements directive; and

(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;

Specific liquidity requirements

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For the purposes of determining the appropriate level of liquidity requirements on the basis of a SREP, the PRA must assess whether the imposition of a specific liquidity requirement is necessary to capture liquidity risks to which an institution is or might be exposed, taking into account the following—

(a) the particular business model of the institution;

(b) the institution's arrangements, processes and mechanisms (as referred to in Directive 2013/36/EU UK law which implemented Section 2 of Chapter 2 of Title 7 to the capital requirements directive, in particular in Article 86);

(d) any systemic liquidity risk that threatens the integrity of the financial markets of the United Kingdom.

Employee remuneration

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(1) The PRA must—

(a) collect the information disclosed by institutions in accordance with the criteria for disclosure set out at points (g), (h) and (i) of Article 450(1) of the capital requirements regulation and use it to benchmark remuneration trends and practices;

(b) collect information on the number of employees in each institution that are remunerated 1 million euros or more per financial year, in pay brackets of 1 million euros, including their job responsibilities, the business area involved and the main elements of salary, bonus, long-term award and pension contribution;

(c) collect the information disclosed by institutions about any decisions taken by their shareholders, owners or members to approve a higher ratio between the fixed and variable components of remuneration approved in accordance with applicable remuneration rules and use it to benchmark practices in relation to the level of such ratios; ...

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In paragraph (1)(c) “applicable remuneration rules” means rule 15.10 of the Remuneration Part of the PRA Rulebook

Diversity practices

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The PRA must—

(a) collect the information disclosed by institutions in accordance with Article 435(2)(c) of the capital requirements regulation and use it to benchmark diversity practices; ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consultation with EBA: supervisory benchmarking of internal approaches for calculation own funds requirements

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PART 8 — Permissions under the CRR

Meaning of “permission” and “protected item” in this Part

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(1) In this Part—

“permission” means a decision made by the PRA in relation to an institution under a power conferred on the PRA by—the capital requirements regulation; ... section 144G of FSMA and CRR rules (as defined in Part 9D of FSMA); section 192XC of FSMA and section 192XA rules (as defined in Part 12B of FSMA);any of the Specified EU Regulations under the Capital Requirements Regulation, as amended from time to time; ora technical standard made by the PRA ... under the functions conferred on them by the Capital Requirements Regulation as amended by Part 4, Chapter 3 of the Capital Requirements (Amendment) (EU Exit) Regulations 2018.

“protected item” has the same meaning as in section 413 of FSMA.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Applications for permissions: process, information and documents

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(1) This regulation applies to an application to the PRA for—

(a) the grant of a permission;

(b) an amendment to an existing permission;

(2) An application must—

(a) be made in such manner as the PRA may direct; and

(b) contain, or be accompanied by, such other information or documents as the PRA may reasonably require.

(3) At any time after receiving the application and before determining it, the PRA may require the applicant to provide it with such further information or documents as it may reasonably require.

(4) The PRA may require any information provided under this regulation to be provided in such form and verified in such manner as it may reasonably require.

(5) The PRA may require any documents provided under this regulation to be produced at such place and authenticated in such manner as it may reasonably require.

(6) Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.

(7) The powers conferred on the PRA by this regulation may not be used to require the production of a protected item.

Decisions: written notices

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(1) On determining an application for the grant of a permission, the PRA must give the applicant a written notice stating—

(a) its decision; and

(b) if the permission is granted, any conditions to which the permission is subject and the date on which the permission takes effect.

(2) Where the PRA varies or revokes a permission, it must give the institution concerned a written notice stating—

(a) that the permission is varied or revoked; and

(b) the date on which the variation or revocation takes effect.

(3) Where the PRA amends a condition to which a permission is subject, it must give the institution concerned a written notice stating—

(a) the amended condition; and

(b) the date on which the amendment takes effect.

Appeals

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(1) Where an applicant is aggrieved at the determination of an application for the grant of a permission, it may refer the matter to the Tribunal.

(2) Where an institution has been granted a permission and is aggrieved at the variation or revocation of the permission or the amendment of a condition to which the permission is subject, it may refer the matter to the Tribunal.

(3) Part 9 of FSMA (hearings and appeals) applies to a reference to the Tribunal under this regulation as it applies to a reference to the Tribunal under an Act.

Publication of written notices

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(1) Subject to paragraph (2), the PRA must publish a relevant notice in the way appearing to the PRA to be best calculated for bringing it to the attention of—

(a) persons likely to be affected by it; and

(b) persons who are, in the opinion of the PRA , likely to make an application for a similar permission.

(2) Paragraph (1) does not apply if—

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