Banking, Insurance and Life Insurance (prudential standard) determination No. 3 of 2016
Intra-group transactions and exposuresIntra-group transactions and exposures
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Intra-group transactions and exposures
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For the purposes of this Prudential Standard, an intra-group transaction and exposure (ITE) is the total exposure, including on- and off-balance sheet exposures, of a Level 3 institution to another Level 3 institution within the same Level 3 group.
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A Level 3 Head must have an ‘ITE policy’ that addresses all material risks arising in relation to ITEs associated with operations undertaken by Level 3 institutions in the Level 3 group. The policy must include systems and procedures to identify, measure, monitor, evaluate, report and control or mitigate all material risks arising from ITEs between Level 3 institutions in the group.
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A Level 3 Head must conduct forward-looking scenario analysis and stress testing of the Level 3 group’s material ITEs. The analysis must assess the impact of changes in market conditions and key risk factors on these ITEs, and how these changes impact the group’s risk profile, capital strength and earnings.
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The management of ITEs must be a part of a Level 3 group’s risk management framework.[1]