PART 3PROHIBITIONS AND EXCEPTIONS
Financial institution exposures: conduit lendingI117
1
A ring-fenced body may incur a financial institution exposure to a relevant financial institution (“A”) where—
a
the only business of A (apart from incidental activities) is to acquire, hold and manage assets from or for an undertaking which is not a relevant financial institution (“B”); and
b
all or part of A's assets are being used to form the whole or part of the security for a loan or any other finance provided to A by the ring-fenced body or by a conduit vehicle of the ring-fenced body for the benefit of B.
2
A ring-fenced body (“C”) may incur a financial institution exposure to a relevant financial institution (“D”) where—
a
D was established by, or is operated for the benefit of, C; and
b
the only business of D (apart from incidental activities) is—
i
to acquire, hold and manage assets from or for C, or
ii
to make loans or provide other finance at the direction or on the advice of C using resources provided by C or raised in the financial markets to entities which are not relevant financial institutions, or to relevant financial institutions which satisfy the conditions in paragraph (1)(a) and (b).