Featured Product

    PRA Announces Additional Measures in Response to COVID-19 Outbreak

    April 09, 2020

    The Financial Policy Committee (FPC) of BoE met to review developments in the financial sector amid the COVID-19 crisis. PRA, with support from FPC, decided to maintain firms' systemic risk buffer at the rates set in December 2019, in response to the economic shock from COVID-19 pandemic. The systemic risk buffer rates will be reassessed in December 2021. The decision is relevant only to ring-fenced banks (RFBs) and large building societies subject to the systemic risk buffer. Additionally, in response to the COVID-19 outbreak, PRA published a modification by consent of the calculation of the total exposure measure of the leverage ratio. PRA also updated its statement on COVID-19 regulatory reporting and disclosure amendments to extend the deadline of two additional returns—credit risk return under the supervisory benchmarking exercise and high earners report (REP005).

    FPC Statement

    FPC usually assesses risks to UK financial stability and the resilience of the UK financial system and publishes that assessment in biannual Financial Stability Reports. Given the material developments in recent weeks, FPC decided to supplement its normal practice with an additional interim Financial Stability Report. That interim Report will be published on May 07, 2020. The interim Report will contain an assessment of the risks to UK financial stability and the resilience of the UK financial system to ongoing economic and market shocks. The assessment will, among others, draw on evidence from recent weeks and reflect the unprecedented actions taken to help alleviate the severe cash flow problems facing households and corporates over this period. The Committee also emphasized that, with tier 1 capital levels more than three times higher than at the start of the global financial crisis, major UK banks have shown, in repeated stress tests, their ability to absorb very severe market shocks by using their capital buffers.

    Decision on Systemic Risk Buffer Rates

    In December 2021, PRA expects to set an systemic risk buffer rate consistent with its statement of policy and the FPC framework. In doing so, PRA will take account of the evolution in firms’ balance sheets in response to COVID-19 and the extent to which they are temporarily inflated. Any decision on systemic risk buffer rates taken in December 2021 would take effect from January 2023. This decision applies to the Capital Requirements Directive (CRD) IV systemic risk buffer and any successor buffer that could be implemented following the adoption of CRD5. The Prudential Regulation Committee (PRC) and FPC also reiterate their expectation that all elements of banks’ capital and liquidity buffers can be drawn down as necessary to support the economy through this temporary shock. 

    Modification by Consent of Calculation of Total Exposure Measure of Leverage Ratio

    PRA notes that firms may calculate their exposure value of regular-way purchases and sales awaiting settlement in line with Article 429g of Capital Requirements Regulation (CRR) 2. PRA is offering a modification by consent so that banks subject to the UK Leverage Ratio would be required to apply this article, for the purpose of PRA rules, if they choose to do so. The statement on modification is relevant to firms subject to the Leverage Ratio Part of the PRA Rulebook. PRA has released a draft Direction addressing the modification to Leverage Ratio Reporting and Public Disclosure rules that provide that the quarterly average figures, to be disclosed or reported for the quarter in which the modification first applied, shall reflect the modification as if it had applied on each day of the quarter.

     

    Related Links

    Keywords: Europe, UK, Banking, COVID-19, Reporting, Systemic Risk Buffer, Leverage Ratio, Credit Risk, Supervisory Benchmarking, PRA Rulebook, FPC, CRD, CRR, Ring Fencing, PRA

    Featured Experts
    Related Articles
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR

    The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy

    The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8196