Helsinki, 2016-11-29 15:23 CET (GLOBE NEWSWIRE) --
On 29 November 2016, the Finnish Financial Supervisory Authority (hereinafter FIN-FSA) has granted Taaleri Plc prior permission under Article 49 Paragraph 1 of the Capital Requirements Regulation (EU) 575/2013 (hereinafter CRR) not to deduct holdings in own funds instruments of Garantia Insurance Company Ltd, which is under the supervision of the Taaleri Plc financial and insurance conglomerate, from the Consolidated Common Equity Tier capital (CET1) of the investment service company. As holdings in insurance companies are not deducted, they are to be risk-weighted according to CRR Article 49 Paragraph 4.
The permission is time-limited and valid from 1 January 2017 until 31 December 2018. The exemption is valid conditional on fulfilment of the conditions set for the exemption.
Taaleri Group forms a financial and insurance conglomerate under the Act on the Supervision of Financial and Insurance Conglomerates (2004/699) as a consequence of the acquisition of Garantia Insurance Company Ltd. FIN-FSA confirmed the formation of a financial and insurance conglomerate by its decision of 23 October 2015. On 30 June 2016, the financial and insurance conglomerate’s own funds stood at EUR 84.3 million and exceeded by EUR 57.3 million the minimum requirement for own funds of EUR 27.0 million. The conglomerate’s capital adequacy ratio was 312.4%, while the statutory minimum requirement is 100%.
In Taaleri Group, capital adequacy in accordance with the Credit Institutions Act (610/2014) and CRR is also determined and reported in addition separately for financial sector supervisory bodies. Taaleri Plc, which is the parent company of an investment service company consolidation group under Chapter 1 Section 16 Paragraph 1 of the Investment Services Act and at the same time also a holding company of a conglomerate under the Act on the Supervision of Financial and Insurance Conglomerates, has applied for an exemption under Article 49 of the CRR not to deduct holdings in own funds instruments of Garantia Insurance Company Ltd, which is under the supervision of the Taaleri Plc financial and insurance conglomerate, from the consolidated Common Equity Tier 1 capital (CET1) of the investment service company.
Conditions of the exemption
The investment service company’s consolidated Common Equity Tier 1 capital (CET 1) in relation to the statutory minimum requirement (Pillar 1) without the exemption granted by FIN-FSA must not, on a quarterly basis, fall below the company’s capital adequacy forecasts for 2017 – 2018 supplied to FIN-FSA. On 31 December 2018, the consolidated Common Equity Tier 1 capital in relation to the statutory minimum requirement without the exemption granted by FIN-FSA must not be below the 8% limit. The ratio thus has to be calculated as the holdings in own funds instruments of insurance companies is deducted for the purpose for monitoring the terms set in the exemption. Taaleri Plc will report its capital adequacy position and update the capital adequacy forecasts to FIN-FSA quarterly, and if the company deviates in some quarter from the above-mentioned capital adequacy forecasts, it will notify FIN-FSA of the matter without delay. The company must notify FIN-FSA in advance of future changes in the Taaleri Group’s corporate structure. In addition to the Pillar 1 capital adequacy requirement, the company must continually assess the level of the investment service company consolidation group’s internal capital requirements in relation to Common Equity Tier 1 capital at the time in question.
Significance of the exemption for the company
CRR contains instructions on how insurance company holdings must, as a general rule, be treated in Common Equity Tier 1 capital and in risk-weighted items. According to these, an insurance company holding, as a general rule, be deducted from the investment service company’s consolidated Common Equity Tier 1 capital. The accrued impact on earnings of the Insurance Company must not be included in the consolidated Common Equity Tier 1 capital of the investment service company.
With the exemption, an insurance company holding that is not deducted from own funds is treated as a risk-weighted item in accordance with the principles applied in calculating the capital adequacy of the consolidated investment service company. The investment service company’s consolidated Common Equity Tier 1 capital would be negative if the insurance company holding were deducted from Common Equity Tier 1 capital. With the exemption, the investment service company’s consolidated Common Equity Tier 1 capital, excluding earnings for the current year, will exceed the capital adequacy requirement by approximately 300%.
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Taaleri in brief
Taaleri is a Financial Group, whose parent company Taaleri Plc is listed on Nasdaq Helsinki’s main market. The Taaleri Group consists of three business areas: Wealth Management, Financing and Energy. Taaleri provides services to institutional investors, companies and private individuals. The Group's subsidiaries engaging in business are Taaleri Wealth Management and its subsidiaries, Taaleri Private Equity Funds Ltd Group, Taaleri Investments Ltd Group, Taaleri Energia Ltd and Garantia Insurance Company Ltd. In addition, Taaleri has associated companies Fellow Finance Plc, which offers peer-to-peer lending services, and Inderes Ltd, which produces analyses and for investors.
At the end of June 2016, Taaleri had EUR 4.2 billion assets under management and 3,600 wealth management customers. Taaleri Plc has approximately 2,600 shareholders. The operations of Taaleri are supervised by the Finnish Financial Supervisory Authority.
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