Capital requirements permissions application guidelines: UK CRR firms

Read our guidelines for completing an application for specific permissions under the UK Capital Requirements Regulation (CRR). They are not intended to be exhaustive or to guarantee that an application will be approved.

IFPR

Before considering the information on this page, please note that on 1 January 2022 a new prudential regime for UK investment firms authorised under MIFID (the Investment Firm Prudential Regime (IFPR)) will come into force.

This means: 

  • the majority of existing waivers and modifications to prudential rules in the FCA handbook will no longer apply
  • the majority of existing CRR permissions will no longer apply to FCA investment firms
  • the new rules contain transitional provisions that give some existing waivers and permissions status under the new regime − firms should consider the transitional provisions in the IFPR rules for more details
  • firms will need to consider applying for permissions, or rule waivers and modifications, of rules in the new sourcebook (MIFIDPRU)

Find out more about IFPR.

Liquidity subgroup applications

Find additional information on the process and requirements for applying for liquidity modifications under our liquidity regime, and the expected timescales:

If you have any questions about liquidity modifications, please contact your usual supervisory contact.

Individual consolidation method applications

We exercise the discretion in UK CRR Article 9 in a similar manner to the previous solo consolidation regime. We continue to apply a high level of scrutiny to these applications.

Individual consolidation is a method of allowing parent institutions to incorporate subsidiaries when calculating capital resources subject to certain conditions being met. Firms should read the specified UK CRR articles before applying for this UK CRR Permission.

To apply for permission to use this discretion, please include UK CRR Article 9 analysis as an appendix to your UK CRR Permission application form.

Inclusion of interim or year-end profits in Common Equity Tier 1 capital

Firms must obtain permission from us to include interim or year-end profits in Common Equity Tier 1 capital before they take a formal decision confirming the final profit or loss.

Firms must obtain that permission through the UK CRR permissions process. 

To help us review these applications, firms must complete and submit the Article 26(2) self-assessment form as additional supporting documentation in their UK CRR permissions application. 

Interest rate risk on derivative instruments

The UK CRR, and the UK legislation and rules implementing the CRD IV, have adopted an approach that requires pricing models to be used to calculate the positions of derivatives and bonds with regard to changes in interest rates set out in UK CRR Article 339 (Table 2).

Firms must obtain permission from us if they intend to use their own sensitivity positions for the purposes of the standardised approach for derivatives and bonds. 

Firms will need to provide us with confirmation that they meet the minimum standards for each set of instruments for which a net weighted sensitivity position is computed. Firms will need to evidence the accuracy of both the sensitivities for each type of instrument and the calculation of the weighted net position.

Firms should read UK CRR Article 331 before applying for this UK CRR permission.

The UK CRR Permission application form must be completed separately for each entity, or each set of instruments, for which a net sensitivity position is computed. Where positions differ only in the currency in which they are denominated, these may be combined in one application form.

In addition to this, firms must also download and complete the following templates and submit this with their application:

Firms should submit the UK CRR permission application form and respond to further queries in good time. We may ask for more information to help assess the application where required.

Issuances of Common Equity Tier 1 instruments

We will evaluate whether issuances of Common Equity Tier 1 instruments meet the criteria set out in Article 28 or, where applicable, Article 29. Firms shall classify capital instruments as CET1 instruments only after we grant permission.

Firms must obtain that permission through the UK CRR permissions process. To help us review these applications, firms must complete and submit the Article 26(3) self-assessment form as additional supporting documentation in their UK CRR permissions application. Please also provide:

  • the total number of shares that have been issued or will be issued
  • the nominal value per share

Page updates

27/07/2021: Information added Investment Firms Prudential Regime (IFPR)