Fixed Overheads Calculation

Under CRD 4  certain firms are required to calculate their Own Funds requirements by reference to fixed overheads in line with Capital Requirements Regulation, Article 97.  In addition, full-scope AIFMs and UCITS firms are also required to ensure minimum Own Funds based upon Article 97 – see Regulatory Roundup 53 for a summary of the prudential regimes.  Having said that, Article 97 does not define ‘Fixed Overheads’.

As mentioned in Regulatory Roundup 59 (September 2014), draft Regulation was published by the EC on the methodology of calculating ‘fixed overheads’ and which was based upon EBA recommendations.

The final adopted Regulation (2015/488) appeared in the Official Journal dated 24 March and so entered into force on 13 April 2015 (in line with Article 2 of said Regulation).

For the avoidance of doubt, the prudential requirements of BIPRU firms involve a ‘Fixed Overheads Requirement’ based upon CRD 3 (see GENPRU 2.1.54) and so the above will not be relevant to them.