Entire Section

  • Application

    • PIB 3.2.1

      In this section:

      (a) Rules PIB 3.2.2 to PIB 3.2.5 apply to an Authorised Firm in any Category;
      (b) PIB Rule 3.2.6 applies only to an Authorised Firm in Category 3B, 3C, 3D or 4; and
      (c) PIB Rule 3.2.7 applies only to an Authorised Firm in Category 1, 2, 3A or 5.
      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
      [Added] DFSA RMI270/2020 (Made 26th February 2020). [VER36/04-20]

    • Maintaining Capital Resources

      • PIB 3.2.2 PIB 3.2.2

        An Authorised Firm that is a Domestic Firm must:

        (a) have and maintain, at all times, Capital Resources of the kinds and amounts specified in, and calculated in accordance with, the Rules in PIB; and
        (b) ensure that it maintains capital and liquid assets in addition to the requirement in (a) which are adequate in relation to the nature, size and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

        • PIB 3.2.2 Guidance

          1. For the purposes of PIB Rule 3.2.2, an Authorised Firm's Governing Body should assess whether the Capital Resources which are required by the DFSA as set out in PIB are adequate in relation to the Authorised Firm's specific business. Additional resources should be maintained by the Authorised Firm where its Governing Body has considered that the required Capital Resources do not adequately reflect the nature and risks of the Authorised Firm's business.
          2. The liabilities referred to in PIB Rule 3.2.2(b) include an Authorised Firm's contingent and prospective liabilities, such as liabilities arising from a change in business strategy or claims made against the Authorised Firm, but not liabilities that might arise from prospective transactions which the Authorised Firm could avoid, for example by ceasing its operations. Liabilities from prospective transactions refers to the potential liabilities which can be avoided by either adequate risk management, risk transfer or avoiding the transaction completely. This refers to any prospective transaction, for example, lending money to a borrower or entering into a contract for the provision of services by a service provider.
          3. An Authorised Firm subject to the requirements in PIB chapter 10 may be required to meet Individual Capital Requirements under those Rules.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 3.2.3 PIB 3.2.3

        An Authorised Firm must have, at all times, Capital Resources which exceed the amount of its Capital Requirement.

        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

        • PIB 3.2.3 Guidance

          The specific Capital Requirements for the various Categories of Authorised Firms are dealt with in sections PIB 3.3, PIB 3.4, PIB 3.5, PIB 3.9, PIB 3.9A and PIB 3.9B.

          Derived from RM111/2012 (Made 15th October 2012).
          [Amended] DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18] [VER20/12-12]

    • Systems and Controls

      • Systems and Controls Guidance

        For the purposes of PIB section 3.2, an Authorised Firm is required to have systems and controls in place to enable it to be certain that it has adequate Capital Resources to comply with PIB Rule 3.2.3 at all times. An Authorised Firm's systems and controls should be such as to allow it to demonstrate its capital adequacy at any particular time if required to do so by the DFSA. Where through the operation of those systems and controls an Authorised Firm forms the view that it may not be able to satisfy the requirements of PIB Rule 3.2.3 in the future, that Authorised Firm is required to immediately inform the DFSA in accordance with PIB Rule 3.2.5.

        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 3.2.4

        An Authorised Firm that is a Branch must:

        (a) ensure that it has and maintains, at all times, liquid assets and access to financial resources which are adequate in relation to the nature, size and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due;
        (b) ensure that it complies with its home state Financial Services Regulator's prudential requirements;
        (c) submit to the DFSA a copy of every capital adequacy summary report and leverage ratio report submitted to its home state Financial Services Regulator within ten business days of the due date for submission to that regulator; and
        (d) in the event of any anticipated or actual breach of any prudential requirements set by its home state Financial Services Regulator, notify the DFSA forthwith with any relevant documents.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
        [Amended] DFSA RM148/2014 (Made 1st January 2015). [VER23/01-15]

      • PIB 3.2.5 PIB 3.2.5

        (1) An Authorised Firm must have systems and controls to enable it to determine and monitor:
        (a) its Capital Requirement; and
        (b) whether the amount of its Capital Resources is, and is likely to remain, greater than the amount of its Capital Requirement.
        (2) Such systems and controls must include an analysis of:
        (a) realistic scenarios which are relevant to the circumstances of the Authorised Firm; and
        (b) the effects on the Capital Requirement of the Authorised Firm and on its Capital Resources if those scenarios occurred.
        (3) An Authorised Firm must notify the DFSA immediately and confirm in writing any breach, or expected breach, of any of the provisions of this chapter by the Authorised Firm.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

        • PIB 3.2.5 Guidance

          1. PIB App3 provides Guidance on the nature and type of stress and scenario testing that Authorised Firms should be undertaking to support their view that they have adequate financial resources to meet their obligations.
          2. The requirements in this chapter apply to Authorised Firms on a solo basis. An Authorised Firm may also be subject to Capital Resources requirements at a Group level. Group requirements are addressed in PIB chapter 8.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

    • Notifications to the DFSA

      • PIB 3.2.6

        (1) This Rule applies to an Authorised Firm in Category 3B, 3C, 3D or 4.
        (2) An Authorised Firm must notify the DFSA immediately and confirm in writing if its Capital Resources fall below 120% of its Capital Requirement.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
        [Added] DFSA RMI270/2020 (Made 26th February 2020). [VER36/04-20]

    • Requirements as to Composition of Capital

      • PIB 3.2.7 PIB 3.2.7

        (1) This Rule applies to an Authorised Firm in Category 1, 2, 3A or 5.
        (2) Subject to PIB Rule 3.6.3 and (3), an Authorised Firm must at all times maintain the following components of capital:
        (a) where the Risk Capital Requirement forms part of the Capital Requirement of the firm under section PIB 3.3 or PIB 3.4:
        (i) CET1 Capital equating to at least 6.0% of the firm's Risk Weighted Assets; and
        (ii) T1 Capital equating to at least 8.0% of the firm's Risk Weighted Assets; or
        (b) where the Expenditure Based Capital Minimum forms the Capital Requirement of the firm under PIB section 3.4:
        (i) CET1 Capital equating to at least 60% of the firm's Expenditure Based Capital Minimum; and
        (ii) T1 Capital equating to at least 80% of the firm's Expenditure Based Capital Minimum.
        (3) The CET1 Capital used to meet the requirement in (2)(a) must not also be used as a component of a Capital Buffer.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
        [Amended] DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]

        • PIB 3.2.7 Guidance

          1. It follows from Rule 3.2.7(2)(a) and Rule 3.2.3 that an Authorised Firm cannot use T2 Capital of more than 2% of its >Risk Weighted Assets to meet its Risk Capital Requirement.
          2. It follows from Rule 3.2.7(2)(b) and Rule 3.2.3 that an Authorised Firm cannot use T2 Capital to meet more than 20% of its Expenditure Based Capital Minimum.
          3. In accordance with Rules 3.9.5, PIB 3.9 A.3 and PIB 3.9B4 the CET1 Capital used for a Capital Buffer cannot constitute CET1 Capital for meeting the Risk Capital Requirement.
          Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
          [Amended] DFSA RM209/2017 (Made 25th October 2017). [VER30/01-18]