The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014

PART 3 U.K. Circumstances in which UK deposit-takers are not ring-fenced bodies

Circumstances in which UK deposit-takers are not ring-fenced bodies U.K.

11.—(1) A UK deposit-taker is not a ring-fenced body if—

(a) it carries out the regulated activity of effecting or carrying out contracts of insurance as principal in accordance with a permission under Part 4A of the 2000 Act;

(b) it is a registered society, a Northern Ireland industrial and provident society or a Northern Ireland credit union;

(c) it complies with the condition set out in paragraph (2) (the “relevant event condition”); or

(d) it complies with the condition set out in article 12 (the “core deposit level condition”).

(2) In relation to a UK deposit-taker, the relevant event condition is—

(a) that the UK deposit-taker would not be a ring-fenced body but for the occurrence of a relevant event; and

(b) not more than four years have passed since the date of that relevant event.

(3) In this article “relevant event”, in relation to a UK deposit-taker, means an event of one of the following kinds—

(a) as a result of a transfer effected by an instrument or order made under or in accordance with any provision of the Banking Act 2009 M1 the UK deposit-taker or a member of its group—

(i) acquires property, rights or liabilities from another institution, or

(ii) acquires securities issued by another institution;

(b) any other power conferred by or as a result of Part 1 of the Banking Act 2009 is exercised in relation to the UK deposit-taker.

Marginal Citations

M1 2009 c. 1.

Core deposit level condition U.K.

12.—(1) The core deposit level condition is that at any particular time (‘T’)—

(a) in the case of a UK deposit-taker which is not a member of a group, its average core deposit total is equal to or less than £25 billion;

(b) in the case of a UK deposit-taker which is a member of a group, the sum of the average core deposit totals for each member of the group that is a relevant group member is equal to or less than £25 billion.

(2) For the purpose of paragraph (1)(b) a group member is a relevant group member if—

(a) it is a UK deposit-taker; and

(b) it does not carry out the regulated activity of effecting or carrying out contracts of insurance as principal in accordance with a permission under Part 4A of the 2000 Act.

(3) Subject to article 13, the average core deposit total for a UK deposit-taker is determined as follows—

(a) calculate the total core deposits held by the UK deposit-taker at the end of each quarter in the core deposit calculation period to produce quarterly totals; and

(b) add those quarterly totals together and divide by the number of quarters in the core deposit calculation period.

(4) The core deposit calculation period is—

(a) in the case of a UK deposit-taker that has existed for three financial years or more, the period of three consecutive financial years of that UK deposit-taker which ends immediately before the start of the financial year in which T falls;

(b) in the case of any other UK deposit-taker, the period for which that UK deposit-taker has existed at T.

(5) If a UK deposit-taker holds core deposits in a currency other than sterling, the quarterly totals referred to in paragraph (3) must be calculated by converting financial amounts representing such deposits into sterling.

(6) The conversion must be made by reference to an appropriate spot rate of exchange as at the last day of the quarter to which a quarterly total relates.

(7) In this article a reference to a quarter is a reference to any complete quarter falling within a core deposit calculation period for a UK deposit-taker.

Deposits excluded from determination of core deposit level U.K.

13.—(1) For the purpose of determining the average core deposit total for a UK deposit-taker the quarterly totals referred to in article 12(3) do not include deposits if—

(a) the deposits concerned are held by the UK deposit-taker as a result of the transfer to it of all or part of the business of another institution, other than by way of an excluded transfer; and

(b) not more than four years have passed since the date of completion of that transfer.

(2) For the purpose of calculating the sum referred to in article 12(1)(b) the average core deposit total for a UK deposit-taker is not included if—

(a) the relevant UK deposit-taker (the “target institution”) became a member of the group concerned as a result of another member of that group (the “acquiring institution”) acquiring securities issued by the target institution;

(b) at the date of that acquisition the target institution was not a ring-fenced body;

(c) that acquisition would, but for the provisions of this paragraph, have resulted in the group of which the acquiring institution is a member ceasing to meet the condition in article 12(1)(b); and

(d) not more than four years have passed since the date of completion of the acquisition.

(3) In this article “excluded transfer” means a transfer which is made—

(a) by way of a ring-fencing transfer scheme; or

(b) to a UK deposit-taker from an institution which is a member of the same group as the UK deposit-taker as at the date of the transfer.