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

CP13/6
CRD IV for Investment Firms
4.22 We have taken into account our existing implementation of comparable treatments under
current CRD. However, in some cases it has not always been possible to concretely determine
how existing FCA own funds standards are affected by CRR transitional provisions, and the
knock-on effect on FCA firms’ capital levels. This can be for various reasons such as:
• how residual amounts are dealt with during the transitional period compared to existing
FCA treatment for those deductions;
• variations in definitions between the CRR and FCA handbook; and
• the types of own funds typically held by FCA firms.
This may mean, therefore, that for some transitional provisions we may not be completely
aligned with our ‘minimal pace of transition’ approach, for example treatment of significant
holdings. In those instances we have taken a transitional provision approach that we do not
believe will be materially detrimental to firms whilst ensuring that the rules are not overly
complex for firms.
4.23 Table 9 outlines the applicable percentages which we propose apply to the capital items which
are subject to transitional arrangements at the discretion of the FCA, for each year of the
relevant transitional period.
Table 9: section a): transitional provisions with timetable from 2014 to 2017
CRR
article Transitional Provision Issue
Relevant CRR
Article for
transition
percentage rate
From
Jan
2014
From
Jan
2015
From
Jan
2016
From
Jan
2017
465 (1)(a) CET 1 ratio (see Article 92(1)(a)) 465(1)(a) 4% 4.5% - -
465 (1)(b) Tier 1 ratio (see Article 92(1)(b) 465(1)(b) 5.5% 6% - -
467(1) Recognition of Unrealised losses
measured at fair value (see
Article 35)
468(1) Recognition of unrealised gains
measured at fair value (see
Article 35)
468(4) Unrealised gains and losses
measured at fair value from
derivative liabilities on own
credit risk(see Article 33(1)(c))
469 (1)(a) Deductions from CET1: losses
for the current financial year
(see Article 36(1)(a))
469 (1)(a) Deductions from CET1:
intangible assets (see Article
36(1)(b))
469 (1)(a) Deductions from CET1: IRB
losses (see Article 36(1)(d))
469(1)(a) Deductions from CET1: DB
pension assets (see Article 36(1)
(e))
467(2) 20% 60% 60% 80%
468(2) 100% 60% 40% 20%
478(1) 20% 40% 60% 80%
478(1) 100% 100% 100% 100%
478(1) 20% 40% 60% 80%
478(1) 20% 40% 60% 80%
478(1) 100% 100% 100% 100%
34 July 2013
Financial Conduct Authority