Prudential Regulation Authority Rulebook

3.1

Where a firm wishes to exclude entities from the scope of prudential consolidation, it will be expected to make a formal application to the PRA. This application should seek to articulate how one of the conditions set out in CRR Article 19(2) (a), (b) or (c) is met.   

3.2

The PRA will assess applications to exclude entities from the scope of prudential consolidation under CRR Article 19(2) on a case by case basis. The PRA will only grant this treatment with respect to undertakings where one of the conditions in CRR Article 19(2) is met. Even where a CRR Article 19(2) condition is met, the PRA will make its own judgment whether to permit this treatment.   

3.3

CRR Article 19(2) allows the consolidating supervisor to decide that an institution, financial institution or ancillary services undertaking, which is a subsidiary or in which a participation is held, need not be included in the consolidation in the following cases:

1. (a) where the undertaking concerned is situated in a third country where there are legal impediments to the transfer of necessary information; or
2. (b) where the undertaking concerned is of negligible interest only with respect to the objectives of monitoring credit institutions.

3.4

If several undertakings meet the criterion in (b) above, and are collectively of non-negligible interest with respect of the specified objectives, the PRA may not agree to exclude them all from the consolidation.

3.5

The PRA may ask a firm to provide information about the undertakings excluded from consolidation.