PRU-EPRS 1.19 Instructional Guidelines

Past version: effective from 16/12/2007 - 13/04/2013
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Most of the numbers in this form are transferred from the other relevant forms such as B10 or B20 — Balance Sheet and appendices to B10 or B20 relating to the calculation of capital charges in respect of Credit, Market and Displaced Commercial Risks.

Item No. Item Instructional Guidelines
B600_112T and B600_113T Tier 1 and Tier 2 capital See PIB Section 2.6 and Table 2.6.1 for a summary of the components of capital base. PIB Section 2.7 describes each capital component in greater detail. Attention is drawn to Partnership Capital which constitutes the capital accounts of partners when the business is created. It must share the same characteristics as permanent share capital, particularly the fact that it must rank for repayment upon winding up or insolvency after all debts and liabilities have been paid. The deduction for partners drawings is in respect of any excess in drawings over current period profits. Attention is also drawn in respect of PIB Rule 2.7.3 in respect of the limitation on the use of general provisions in Tier 2 capital.

Authorised Firms should note that there are related Instructional Guidelines on the capital base for forms B10 and B20. The Instructional Guidelines there would apply in their entirety to this section of the return.
B600_1230 Deduction for excess of reserves This applies only in respect of Category 5 Authorised Firms with regards the Investment Risk and Profit Equalisation Reserves. See PIB Section 2.9.
B600_129T NTB Capital Requirement See PIB Rule 2.8.3 for a definition of the components of non trading book capital. For Category 5 Authorised Firms, the CRCOM and FER are on self financed assets only. These numbers will be derived from forms B10 and B20 for Category 1-4 Authorised Firms and Category 5 Authorised Firms, respectively. The DCR charges are derived from form B10 Appendix 4 B10 and Form B20 Appendix 8 for Category 1-4 Authorised Firms and Category 5 Authorised Firms, respectively.
B600_133T Capital allocated to the NTB The limitations on the use of capital allocated to the NTB are set out in PIB Section 2.8.
B600_141T TB Capital Requirement This is defined in PIB Rule 2.8.3. For Category 1-4 Authorised Firms, the numbers here are derived from Appendices B10A2 and B10A3 (also see Instructional Guidelines relating to those appendices). For Category 5 Authorised Firms, the capital requirements are in respect of self financed assets only (PSIA assets are subject to a DCR charge). These numbers are derived from Appendices B20A4 and B20A7.
B600_142T Total Eligible Capital allocated to the TB Note the limitation on the use of Tier 2 capital as referenced to PIB Rule 2.8.2 (b) (iii). Category 1 and 5 Authorised Firms must exclude from Tier 2 trading book capital any excess over 200% of Tier 1 trading book capital. For Category 2-4 Authorised Firms, the appropriate percentage is 250%.
B600_1520 to B600_1560 Deductions from total capital resources The deductions in respect of connected lending, material holdings and qualifying holdings are defined in Rules PIB 2.7.4, PIB 2.7.5 and PIB 2.7.6, respectively.
B600_160T Capital Requirement The non additive thresholds of capital are set out in PIB Rule 2.3.1. Details of the base capital requirement are further analysed in PIB Section 2.4. The Expenditure Based Capital Requirement definition is set out in PIB Section 2.5 and applies to Categories 2, 3 and 4 Authorised Firms only.
B600_1610 Resources less requirement Note that the total of resources over requirement is expected to be positive. In the event of the requirement exceeding resources, Authorised Firms should make immediate contact with DFSA and not wait till the form has been submitted.
B600_1620 Risk Asset Ratio Obtained by dividing total capital resources by the risk weighted assets (whether on the trading or non trading books). The risk weighted assets have been reported by Authorised Firms in the preceding Forms B10 and 20 (including appendices to these forms). The capital resources are summarised in Form B60. Note that the value in this cell is calculated by EPRS.
Derived from GM5/2007 (Made 16th December 2007). [VER1/12-07]