• BANK Division 9.6.B BANK Division 9.6.B Treatment of branches

    • BANK 9.6.9 Global net stable funding concession — branches

      (1) A liquidity risk group B banking business firm that is a branch may apply to the Regulatory Authority for a global net stable funding ratio concession.
      (2) In its application the firm must satisfy the Authority that:
      (a) because of its business model and in the market conditions prevailing at the time of application, the firm has no reasonable prospect of being able to comply with the other requirements of this Part;
      (b) in the jurisdiction where the firm's head office is established, there are no legal constraints on the provision of funding to the firm; and
      (c) the head office is subject to liquidity requirements that are equivalent to, or more restrictive than, those imposed under these rules.

      Guidance
      1 In considering whether to grant such a concession, the Authority would take into account:
      •   the requirements, as to managing, monitoring and controlling stable funding, of the regulator responsible for the firm's head office
      •   the systems and controls used by the head office to ensure that the firm's stable funding remains adequate
      •   any written assurance from the head office that:
      •   it will ensure that, at all times, enough stable funding is available to support the firm
      •   it will notify the Authority, at the same time as it notifies its home regulator, of any material issues concerning the firm's exposure to liquidity risk or its compliance with applicable stable funding limits, including its required NSFR
      •   in the event of a stable funding crisis, it will give the Authority all relevant information on the whole firm's stable funding, and a list of any known constraints (legal or otherwise) on the head office's providing the firm with stable funding
      •   any notification from the head office's home regulator:
      •   either stating that the regulator has no objection to the firm's obtaining the concession, or acknowledging that the application has been made
      •   giving information about, and confirming, the quality of the stable funding at the head office.
      (3) If the Authority grants the concession, the firm need not comply with a requirement of this Part specified by the Authority.
      (4) The Authority may specify the period for which the concession is valid. If no period is so specified, the concession is valid until the Authority revokes it.
      (5) The firm:
      (a) must give the Authority, at least quarterly, a copy of the NSFR calculation for the firm, as submitted by its head office to its home regulator;
      (b) must notify the Authority immediately (but within 3 business days), in writing, of:
      (i) the results of every assessment by its home regulator of the quality of stable funding at the firm's head office;
      (ii) any adverse finding or action taken by that regulator;
      (iii) any change or potential change in the firm's funding strategy or business model, or material change or material potential change in the structure of its balance-sheet; and
      (iv) any changes that affect its compliance with the conditions referred to in subrule (2).
      (6) On the basis of the Authority's assessment of the firm's stable funding risk exposures, the Authority may, at any time, by written notice, do any 1 or more of the following:
      (a) modify or exclude any of the requirements under subrule (5);
      (b) impose additional requirements;
      (c) revoke the concession.
      Inserted by QFCRA RM/2018-1 (as from 1st May 2018).