Guidance on Completion of the Prudential Information Return for Banks (December 2008)

Summary

This is technical guidance from the BMA's Banking Department explaining how licensed banks and deposit companies should complete the Prudential Information Return (PIR), which is Bermuda's Basel II Capital Adequacy Return. It sets out definitions, valuation conventions, and line-by-line instructions for each section of the return, and should be read alongside the Authority's Revised Framework for Regulatory Capital Assessment (December 2008).

• Reporting basis: The return must be completed on both an unconsolidated and a consolidated basis, with the scope of consolidation agreed between the institution and the BMA in line with the Authority's Consolidated Supervision paper.
• Valuation and accounting conventions: Assets and liabilities are generally reported at book value (mark to market for trading book positions), net of specific provisions, on an accrual basis, with off balance sheet items shown at principal amount.
• Maturity classification: On and off balance sheet items must be classified by residual or original maturity (one year or less versus more than one year), with detailed rules for renegotiated, tranche, fluctuating and forward commitments.
• Group and related party definitions: Sets out definitions of group companies and related parties (including directors, controllers and associates) used for reporting exposures within the return.
• Netting rules: Specifies strict criteria (formal agreement or legal right of set off, same currency, same customer or group) before debit and credit balances may be netted.
• Form completion mechanics: Covers detailed guidance for each section of the return, including standardised credit risk, operational risk, market risk, balance sheet and profit and loss sections, plus SIC industry classification codes for sector analysis.

The guidance is aimed purely at ensuring accurate and consistent completion of the PIR; it does not itself create new capital or licensing requirements beyond those in the underlying capital framework.

Key obligations

• Banks and deposit companies licensed under the Banks and Deposit Companies Act 1999 must complete the Prudential Information Return as at the end of March, June, September and December each year, on both an unconsolidated and consolidated basis
• Every data box on the return must be completed, entering zero where appropriate, using only the designated input areas
• Loans, advances, bills, securities and off balance sheet items must be reported net of specific or earmarked general provisions
• Positions must be classified by residual or original maturity (one year or less, or more than one year) following the specified rules for renegotiated commitments, tranched drawdowns, fluctuating facilities and forward commitments
• On balance sheet debit and credit balances may only be netted where the specified conditions on legal right of set off, common currency and common customer/group are met
• Institutions must apply the defined scope of consolidation as agreed with the BMA in accordance with its Consolidated Supervision paper when preparing the consolidated return

Applies to

banks, deposit companies

Deadlines

• end of March, June, September and December each year: Recurring quarterly reporting dates as at which the Prudential Information Return must be completed by licensed banks and deposit companies