PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK. SS3/21 provides an overview of how the supervisory expectations on the new and growing non-systemic UK-incorporated banks evolve, as these entities grow from the point of authorization to being regarded as fully established banks. PS8/21 also updates SS31/15 on the Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) as well as the Statement of Policy on methodologies of PRA for setting Pillar 2 capital (which contain references to SS3/21). PS8/21 took effect upon its publication on April 15, 2021.
SS3/21, which constitutes Appendix 1 of the PS8/21, provides background on the to-date progress with respect to new bank authorizations, common issues of new and growing banks, and an overview of how the supervisory approach of PRA evolves as banks grow and develop. It provides details about the supervisory expectations from new and growing banks, with a focus on common issues related to business model, governance, risk management, and controls. SS3/21 also sets out the expectations of PRA for capital management in new and growing banks and presents a revised and simplified PRA methodology for calibrating the PRA buffer for these banks. Finally, it sets out the coordinated approach of PRA and BoE to ensure that new and growing banks can exit the market in an orderly manner, followed by the supervisory approach of PRA once banks become established.
PS8/21 also provides feedback to responses to the consultation paper CP9/20, which proposed this supervisory approach for new and growing non-systemic UK banks. The proposals in CP9/20 constituted clarifications about the current supervisory approach of PRA, with the exception of proposed changes to the calculation of PRA buffer for new banks, and set out expectations for solvent wind-down plans. PRA had received 17 responses to the CP9/20. Respondents generally welcomed the proposals, but made a number of observations and clarification requests. After considering the comments, PRA revised the proposal to provide greater clarity on the PRA expectations in specific areas.
Related Links
Effective Date: April 15, 2021
Keywords: Europe, UK, Banking, Non-Systemic Banks, SREP, ICAAP, Regulatory Capital, CP9/20, Resolution Framework, Basel, Pillar 2, PRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
OCC Issues Booklet on Allowances for Credit LossesRelated Articles
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
