CP13/6 - CRD IV for Investment Firms - Financial Conduct Authority

FCA 2013/xx
Core tier one capital: additional information
2.2.84 G In the case of an insurer, GENPRU 2.2.8 R(2) and GENPRU 2.2.83R(3)
have the effect that the firm should be under no obligation to make any
payment in respect of a tier one instrument if it is to form part of its
permanent share capital unless and until the firm is wound up. A tier one
instrument that forms part of permanent share capital should not therefore
count as a liability before the firm is wound up. The fact that relevant
company law permits the firm to make earlier repayment does not mean that
the tier one instruments are not eligible. However, the firm should not be
required by any contractual or other obligation arising out of the terms of
that capital to repay permanent share capital. Similarly a tier one instrument
may still qualify if company law allows dividends to be paid on this capital,
provided the firm is not contractually or otherwise obliged to pay them.
There should therefore be no fixed costs. GENPRU 2.2.83AR to GENPRU
2.2.83FR GENPRU 2.2.83DG impose more specific conditions on coupon
payment and winding up which are applicable to BIPRU firms.
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Core tier one capital: profit and loss account and other reserves: Losses
2.2.85 R (1) Negative amounts, including any interim net losses (but in the case
of a BIPRU investment firm, only material interim net losses), must
be deducted from profit and loss account and other reserves.
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(3) If interim losses as referred to in (2) exceed the 10% figure in (2)
then a BIPRU investment firm must deduct the whole amount of
those losses and not just the excess.
Deduction from tier one: Intangible assets
2.2.156 G Intangible assets include goodwill as defined in accordance with the
requirements referred to in GENPRU 1.3.4R (General requirements:
accounting principles to be applied) applicable to the firm. The treatment of
deferred acquisition cost assets for BIPRU investment firms is dealt with in
GENPRU 1.3 (Valuation); they should not be deducted as an intangible
asset.
2.2.156
A
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G
The treatment of deferred acquisition cost assets for BIPRU firms is dealt
with in GENPRU 1.3 (Valuation); they should not be deducted as an
intangible asset.
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