Entire Section

  • PIB A4.11.1 PIB A4.11.1

    (1) An Authorised Firm may treat the following Exposures as exempt from the Concentration Risk limits in PIB chapter 4 if they are to Counterparties not Connected to the Authorised Firm:
    (a) asset items or Exposures constituting claims on central governments, Central Banks and Public Sector Entities (PSEs) which receive a Credit Quality Grade rating 1 or 2 in accordance with PIB Rule 4.12.4;
    (b) asset items or Exposures constituting claims on international organisations and multi-lateral development banks (MDBs) which receive a 0% (Credit Quality Grade rating of 1) risk weight as set out at PIB Rule 4.12.7;
    (c) asset items or Exposures carrying the explicit guarantees of either (a) or (b) where the claims on the entity providing the guarantee would receive a 0% weighting (Credit Quality Grade rating of 1);
    (d) Exposures for which the Authorised Firm has Collateral in the form of cash deposits or certificates of deposit, including certificates of deposit issued by the Authorised Firm, held by the Authorised Firm, or held by the Authorised Firm's Parent Regulated Financial Institution or a Subsidiary of the Authorised Firm, but only if:
    (i) the Authorised Firm and its Parent Regulated Financial Institution or the Subsidiary of the Authorised Firm concerned are subject to consolidated supervision;
    (ii) the enforceability requirements in PIB section 4.13 (Credit Risk mitigation) are met; and
    (iii) material holdings in Regulated Financial Institutions and other Exposures which have been deducted from an Authorised Firm's Tier 1 Capital as required in PIB chapter 3.
    (2) If an Authorised Firm obtains credit protection relating to an exempt Exposure under (1)(a), the Authorised Firm must nevertheless apply the Large Exposure limits to the Exposure to the credit protection provider, notwithstanding that the original Exposure is exempt.
    (3) An Authorised Firm must report Exposures which are exempt under (1)(a), (b) and (c) to the DFSA.
    Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
    [Amended] DFSA RMI293/2021 (Made 24th February 2021). [VER38/04-21]

    • PIB A4.11.1 Guidance

      1. In order to be applicable under (c) the guarantees must meet the requirements of PIB section 4.13.9 in relation to Credit Risk mitigation.
      2. An Authorised Firm can only treat Exposures as Collateralised provided the conditions of Rules PIB 4.13.5 to PIB 4.13.8 (relating to Credit Risk mitigation) are met. Item (d) also includes cash received under a credit linked note issued by the Authorised Firm and loans and deposits of a Counterparty to or with the Authorised Firm which are subject to an on balance sheet Netting agreement recognised under PIB section 4.13 (Credit Risk mitigation).
      3. The DFSA may consider a waiver for other sovereign Exposures where there is a local regulatory requirement to hold assets with a national regulatory authority. Authorised Firms will be required to apply for a waiver of the Large Exposure requirements in this regard and will be considered by the DFSA on a case by case basis.
      4. The DFSA may, where it considers it appropriate, allow two or more Exposures to a sovereign not to be treated as connected or related if the sole reason for linking them is being controlled or economically dependent on the sovereign (including eligible PSEs). An eligible PSE is a PSE referred to in PIB Rule A4.11.1(a).
      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
      [Added] DFSA RMI293/2021 (Made 24th February 2021). [VER38/04-21]