European Communities (Capital Adequacy of Credit Institutions) Regulations 2006

• Jurisdiction: Ireland
• Citation: IR SI 661/2006
• Year: 2006

STATUTORY INSTRUMENTS
S.I. No. 661 of 2006
entitled
European Communities (Capital Adequacy of Credit Institutions) Regulations 2006
Made by the Minister for Finance
EUROPEAN COMMUNITIES (CAPITAL ADEQUACY OF CREDIT INSTITUTIONS) REGULATIONS 2006
Table of Contents
PART 1
PRELIMINARY
REGULATION
1. Citation and commencement. 2. Interpretation.
PART 2
OWN FUNDS
3. Unconsolidated own funds of credit institutions. 4. Waiver of Regulation 3(2)(d) to (h). 5. Alternative to deduction of items referred to in Regulation 3(2)(g) and (h). 6. Circumstances in which certain credit institutions need not deduct items referred to in Regulation 3(2)(d) to (h). 7. Requirements applicable to items referred to in Regulation 3(1)(a), (b) and (c). 8. Other items. 9. Fixed term cumulative preferential shares and subordinated loan capital, etc. 10. Consolidated amounts relating to items listed under Regulation 3. 11. Limits on items referred to in Regulation 3. 12. Compliance with this Part.
PART 3
PROVISIONS AGAINST RISKS
13. Where compliance must be on an individual basis. 14. Discretion of Bank to allow parent credit institutions to incorporate subsidiaries in calculation requirements under Regulation 13(1). 15. Application of Regulations 13 and 14 to parent credit institutions in the State, etc. 16. Application of Part 11 to EU based parent credit institutions, etc. 17. Discretion of Bank to exclude subsidiaries from consolidation, etc. 18. Calculation of requirements. 19. Minimum level of own funds.
PART 4
MINIMUM OWN FUNDS REQUIREMENTS FOR CREDIT RISK
Chapter 1
Definition of “exposure” and Approaches that may be used for Calculation under Regulation 19(a)
20. Definition of “exposure”. 21. Calculation of risk-weighted exposure amounts for purposes of Regulation 19(a).
Chapter 2
Standardised Approach
22. Determination of exposure values. 23. Classification of exposures. 24. Calculation of risk-weighted exposure amounts. 25. Use of ECAIs. 26. Determination of credit quality steps to be associated with eligible ECAI. 27. Use of credit assessments. 28. Use of treatment accorded exposures in third countries.
Chapter 3
Internal Ratings Based Approach
29. Permission to use IRB Approach is required. 30. Implementation of IRB Approach. 31. Classification of exposures. 32. Calculation of risk-weights for various exposure classes. 33. Calculation of EL. 34. Circumstances in which Chapter 2 may be used for individual business lines. 35. Transitional provisions for relevant data.
Chapter 4
Credit Risk Mitigation
36. Definition of “lending credit institution”. 37. Recognition of credit risk mitigation. 38. Credit protection to be legally effective, etc. 39. Use of credit risk mitigation.
Chapter 5
Securitization
40. Calculation of risk-weighted amounts for securitization positions. 41. Transfer of credit risk. 42. Calculation of risk-weights under securitization. 43. Use of ECAI credit assessments in securitization. 44. Determination of credit quality steps to be associated with eligible ECAI. 45. Use of credit assessments. 46. Securitization of revolving exposures subject to early amortisation provision. 47. Originator credit institution shall not provide support to securitization beyond contractual obligations.
PART 5
MINIMUM OWN FUNDS REQUIREMENTS FOR OPERATIONAL RISK
48. Use of approaches for operational risk. 49. Basic Indicator Approach. 50. Standardised Approach. 51. Advanced Measurement Approach.
PART 6
LARGE EXPOSURES
52. Interpretation of Part 6. 53. Calculation of exposures, etc. 54. Large exposure to client or group of connected clients. 55. Sound administrative and accounting procedures, etc. to identify and monitor large exposures. 56. Reporting of large exposures. 57. Intra-group loans. 58. Requirements applicable to recognition of funded or unfunded credit protection. 59. Exposures exempt from the application of Regulation 57. 60. How collateral can be taken into account in calculating credit risk in large exposure. 61. Action to be taken by credit institution when obligations in other provisions of this Part are disapplied.
PART 7
QUALIFYING HOLDINGS OUTSIDE FINANCIAL SECTOR
62. Limits on qualifying holdings which may be held by credit institutions. 63. Exclusions from Regulation 62(I) and (2). 64. Discretions of Bank.
PART 8
CREDIT INSTITUTIONS' ASSESSMENT PROCESS
65. Strategies and processes relating to amount, etc. of internal capital required.
PART 9
SUPERVISION AND DISCLOSURES BY COMPETENT AUTHORITIES
66. Review and evaluation by Bank of credit institutions' compliance with recast Directive (CI). 67. Joint decisions of competent authorities. 68. Reporting by Bank. 69. Persons who direct business of financial holding company to be of good repute. 70. Actions to be taken by Bank if credit institution does not meet the requirements of these Regulations.
PART 10
DISCLOSURES BY COMPETENT AUTHORITIES
71. Disclosures by competent authorities.
PART 11
DISCLOSURES BY CREDIT INSTITUTIONS
72. Disclosures by credit institutions. 73. Exemptions to disclosures required under Regulation 72. 74. Publication of disclosures. 75. Where disclosures are published. 76. Powers of Bank relating to disclosures.
PART 12
AMENDMENTS TO EUROPEAN COMUNITIES (LICENSING AND SUPERVISION OF CREDIT INSTITUTIONS)REGULATIONS 1992
77. Definition of “Principal Regulations”. 78. Amendment of Regulation 3 of Principal Regulations. 79. Amendment of Regulation 16 of Principal Regulations. 80. Amendment of Regulation 20 of Principal Regulations. 81. Amendment of Regulation 23 of Principal Regulations.
PART 13
TRANSITIONAL PROVISIONS
82. Transitional provisions - general. 83. Transitional provisions - calculation of risk-weighted exposure amounts for certain exposures, etc. 84. Transitional provisions - discretions of Bank.
I, ______________________, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), as amended by the European Communities (Amendment) Act 1993 (No. 25 of 1993), and for the purpose of giving effect to Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast)1 , hereby make the following Regulations:
PART 1 Preliminary
	Citation and commencement.	1. (1) These Regulations may be cited as the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006.
(2) Subject to Part 13 and paragraph (3), these Regulations shall come into operation on 1 January 2007.
(3) Regulations 32 and 51 shall come into operation on 1 January 2008.
	Interpretation.	2. (1) In these Regulations -
“Bank” means the Central Bank and Financial Services Authority of Ireland within the meaning of the Central Bank Act 1942 (No.22 of 1942) as amended by the Central Bank and Financial Services Authority of Ireland Act 2003 (No. 12 of 2003);
“competent authority” -
(a) in relation to the State, means the Bank, and
(b) in relation to any other Member State, means the body or bodies charged by law in the Member State with the supervision of credit institutions;
“CRD Regulations (IF)” means the European Communities (Capital Adequacy of Investment Firms) Regulations 2006 (S.I.[] of 2006);
“recast Directive (CI)” means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast).
(2) A word or expression that is used in these Regulations and is also used in the recast Directive (CI) shall have in these Regulations the same meaning as it has in the recast Directive (CI) unless the contrary intention appears.
PART 2 Own Funds
	Unconsolidated own funds of credit institutions.	3. (1) Subject to the limits imposed in Regulation 11, the unconsolidated own funds of a credit institution shall consist of the following items:
(a) capital within the meaning of Article 22 of Directive 86/635/EEC of the European Parliament and of the Council of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions2 , in so far as it has been paid up, plus share premium accounts but excluding cumulative preferential shares,
(b) subject to paragraphs (3) and (4), reserves within the meaning of Article 23 of Directive 86/635/EEC and profits and losses brought forward as a result of the application of the final profit or loss,
(c) revaluation reserves within the meaning of Article 33 of Directive 78/660/EEC of the European Parliament of the Council of 25 July 1978 on the annual accounts of certain types of companies3 ,
(d) other items within the meaning of Regulation 8, and
(e) fixed-term cumulative preferential shares and subordinated loan capital as referred to in Regulation 9(1).
(2) The following items shall be deducted from the unconsolidated own funds of a credit institution in accordance with Regulation 11:
(a) own shares at book value held by a credit institution,
(b) intangible assets...